Confronting Covid-19: How Partners Made Zoom, Microsoft Teams And Cisco Webex Essential Viewing

Solution providers almost overnight helped their customers make videoconferencing a reality. Sales of Zoom, Microsoft Teams and Cisco Webex have skyrocketed -- but it’s the services that are driving astronomical growth.

When the largest hospital system at the epicenter of the COVID-19 crisis in New York City needed to broadcast calls from its CEO to 20,000 physicians, nurses and staff for daily pandemic updates, solution provider Clover Communications recommended Zoom Video Communications.

“[On a] Thursday night, the hospital called us with the request. We looked at four or five other options, but Zoom was the only one that could get 20,000 seats up by Monday morning,” said Dominick Callandriello, president and CEO of Clover, a Morristown, N.J.-based Zoom partner. “These were calls where they were announcing the number of deaths, having moments of silence, and sharing the number of cases. Without this kind of tool, I don’t know how the CEO would have had an opportunity to drive his people to move forward.”

The rise of the global coronavirus pandemic has created unparalleled opportunities for solution providers to drive sales of collaboration and Unified-Communications-as-a-Service (UCaaS) solutions such as Zoom, Microsoft Teams and Cisco Webex while wrapping in additional services. In particular, videoconferencing as a service became ubiquitous as people across the U.S. rearchitected their lives to work, learn and receive health care from home.

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Less than a month into the pandemic, Zoom had already entered the national lexicon, becoming synonymous with videoconferencing, Callandriello said: “Zoom became the Kleenex of video.”

The scope of the opportunity is unlike anything Clover has seen.

In recent years, UCaaS has accounted for, at best, 20 percent of Clover’s sales as the company focused more heavily on “the plumbing”—networking and telecom services. Over the past 90 days, UCaaS and video-related products have made up about 70 percent of the company’s sales, according to Callandriello.

“We’ve never seen such an acceleration of a product. It’s been really drastic. We’ve seen video and UCaaS advance probably two years in their life cycle from a sales perspective because of the onset of COVID,” Callandriello said.

Videoconferencing has long taken its licks from detractors who felt in-room systems were never easy enough to use. But Zoom’s as-a-service delivery model and simple interface have changed that narrative.

“Zoom took off so quickly because it’s so easy to use and the adoption rate within an organization is unlike any other product we’ve ever seen. Every client meeting has become a video meeting all of a sudden,” said Owen Hayes, vice president of operations for Clover. Clifton Park, N.Y.-based Subsidium Technologies, a Zoom partner, previously worked with another videoconferencing provider, but the technology was “expensive and complex,” said Ed Degenhart, co-founder and managing partner of Subsidium.

“It was always an obstacle for people to communicate via video,” Degenhart said. “We’ve been amazed at how easily Zoom works.” Subsidium landed its first large-scale videoconferencing deal in June—75,000 Zoom licenses to one of the largest school districts in the U.S. Many customers, like schools, were forced into adopting videoconferencing technologies rapidly and, at the same time, needed to ramp up bandwidth to support these collaboration tools.

Subsidium has been “white-gloving” Zoom video services for its customers, which include implementation and networking, adoption and life-cycle services, Degenhart said. And customers on free trials have been converting to paid accounts, he added.

Investment In Videoconferencing Is Sky High

A recent survey from research firm IDC found that 55 percent of technology leaders foresee increased investments in videoconferencing in the current environment—the highest of any technology segment. A separate survey from IDC revealed that the vast majority of U.S. enterprises—87 percent—expect that employees will still work from home at least three days a week even after offices fully reopen.

But these videoconferencing solutions aren’t selling themselves. In an environment dominated by the COVID-19 crisis, solution providers working with Zoom, Microsoft Teams and Cisco Webex are making money by wrapping services and driving complex solution sales around the off-the-shelf offerings.

At Continuant, a call came in from a large pharmaceutical company that was trying to migrate to the Microsoft Teams collaboration app on its own—but had quickly discovered the task was way too big. “They needed an expert to do it for them,” said David Ellis, vice president of collaboration at Tacoma, Wash.-based Continuant.

For the pharma company, with 25,000 employees spread across multiple countries, moving to cloud-based videoconferencing and collaboration had never seemed necessary until the COVID-19 pandemic hit and workers started using Teams on their own. The cloud video, voice, chat and file-sharing features of Teams “tipped the scale for them,” Ellis said.

Continuant is now migrating that company to Teams, a project that pulls in significant consulting fees and recurring revenue. Overall, Continuant’s revenue related to Teams is expected to surge by up to 50 percent in 2020 compared with last year. “What’s so attractive with Teams is that there are so many revenue streams for a company like ours,” Ellis said.

For the Teams project at the pharma customer, Continuant started off by holding business case workshops before moving into design and deployment. Recurring revenue will stem from managed services and from ongoing services around adoption and change management, while moving the customer to Teams will also generate hardware revenue from networking and conferencing equipment. “We’re getting paid all along the way,” Ellis said.

Likewise, at New York-based Logicalis U.S., No. 53 on the 2020 CRN Solution Provider 500, the revenue opportunity from Microsoft Teams professional services such as governance has been massive, said Tim Beamer, senior solutions architect for Logicalis U.S.

Governance includes ensuring that roles, permissions, user capabilities and third-party connections are set up in an ideal and secure way for the customer. “That governance piece becomes really critical, and if you get that right, the Teams environment just works a lot better,” he said.

For instance, Logicalis U.S. is helping to deploy Teams for a large health-care provider, which operates in a highly regulated industry—raising the stakes for oversight of Teams and opening the door to adding a lot of value, Beamer said. Data protection rules and other regulations “have to be factored in with how you govern and administer that Teams environment,” he said.

“One of the things Microsoft did really well with Teams is they made it very easy for everybody to use. Anybody can create a team by default. That’s good and that’s bad. That means you have to make sure you have a good governance model in place,” Beamer said.

A number of other solution providers also pointed to governance as among the biggest revenue drivers from Teams, which is part of Microsoft’s Office 365 subscription-based productivity suite and includes built-in access to key collaboration apps such as SharePoint and OneDrive. At iV4, a unit of Atlanta-based ProArch, providing Teams governance work has led to a number of “offshoot projects,” said Jeanne Morelli, vice president of operations at iV4.

“When we start talking about what Teams is doing for them, and then we start talking about SharePoint, oftentimes there are business process and workflow projects that stem from that,” Morelli said. “Maybe there are apps that you can add to Teams to help them build out a business process. Maybe there is SharePoint configuration and implementation and customization that results from that conversation.”

Like with the surge in demand for Zoom, the shift to videoconferencing during the initial phases of the COVID-19 crisis was a main booster of Teams usage. Teams has rocketed past 75 million daily active users, according to figures provided by Microsoft as of late April. That’s about four times the size of the Teams user base as of last November. And Microsoft continues to enhance Teams video meetings with new features, including a larger gallery view and “Together Mode,” which places participants into a shared virtual background such as an auditorium.

For Teams, “the ability to connect via video has been huge,” said Matthew Feeley, partner and director at Bannockburn, Ill.-based Netrix, No. 183 on the 2020 CRN Solution Provider 500. “We have many clients, like law firms, that traditionally didn’t use video. Now they’re using it, and they expect others to use it.”

Depending on how offices take shape as they reopen, it’s likely that many executives and workers will expect to carry over the same video experience they had at home using Teams, Feeley said.

“The expectation will be that the conference room or huddle room needs to be able to work as seamlessly as a Teams meeting does on my laptop,” he said. “So, I think there’s going to be a nice uptick in work around how you truly make those rooms work just as efficiently as a Teams meeting. And video is the driver behind that.”

Combining video with other solutions, like voice, is critical in boosting user adoption and adding more value in the eyes of the customer, Clover’s Callandriello said. “It’s about helping the customers become more productive with the tools. There’s so much these tools can do.”

Clover landed a large Zoom deal during the pandemic with a regional bank that has more than 900 users and 120 branch office locations. The solution provider was able to get 600 users up in three days. Within a week, all of the bank’s employees were using Zoom on a daily basis for video meetings. The deployment was so successful that the bank also migrated to Zoom Phone to put all of its communications on the same platform.

For Avant Communications, a Chicago-based master agent that works with Clover, Zoom swelled to account for 14 percent of the company’s total UCaaS sales year to date in 2020, up from zero the year before, said Alex Danyluk, Avant’s chief strategy officer.

“[This made] Avant’s adviser channel the No. 1 channel sales group in second-quarter 2020 for Zoom’s entire channel ecosystem for both overall new sales and Zoom’s new phone service sales,” Danyluk said. “All this occurred as Avant’s overall ecosystem of UCaaS opportunities swelled 86 percent higher during the first months of COVID-19.”

At the end of Zoom’s second fiscal quarter of 2021, which ended July 31, the video specialist had approximately 370,200 customers with more than 10 employees, up approximately 458 percent from the same quarter last fiscal year. Zoom’s total revenue climbed 355 percent year over year to $663.5 million.

With a market cap standing at more than $120 billion, Zoom is now more valuable than IBM and AMD.

Through The Channel Lens

While Zoom has worked its way into the daily lives of many users, it is still very much the new kid on the block when it comes to the channel. Rivals Microsoft and Cisco, by comparison, have long and storied histories working with and supporting solution providers.

San Jose, Calif.-based Zoom said about 10 percent of its business comes through the channel today. Zoom, which did some business through the VAR channel previously, launched its first-ever referral partner program in March to also target agent partner types. The program teamed Zoom with a handful of U.S.-based master agents. But it’s unclear how closely Zoom engages directly with its channel partners.

The Zoom partners that spoke with CRN all work through master agents, arrangements that are going smoothly but offer little insight for those solution providers into the inner workings of Zoom’s channel strategy.

“I think the channel is very new for [Zoom],” said Subsidium’s Degenhart, whose organization works with Zoom through Avant. Degenhart got the chance to talk to Zoom CEO Eric Yuan about going to market through the channel in 2017.

“Three years ago, we were trying to drive him into the channel and help him understand what our channel is all about,” he said. “Obviously, they were having success on their own. But it took them this long to understand there’s a whole channel they should leverage. In the end, they did, and I think they are seeing amazing results from that [decision].”

Zoom’s referral partner program saw “staggering growth” in its first two months with about 2,000 agent partners signing on to work with Zoom through master agents, Laura Padilla, head of channel and partners, told CRN.

“We’ve seen amazing growth and an amazing response from the partner community. We are now actively trying to meet those demands and requests for deal registrations,” she said in April.

Over at Microsoft, the tech giant reported record revenue during its fiscal fourth quarter of 2020, which ended June 30—attributed to the huge growth in cloud products such as Teams. Revenue for the cloud-based Office 365 Commercial offering, which includes Teams, jumped 31 percent during the quarter, year over year.

While much of the initial Teams adoption during the pandemic was about enabling remote work, many solution providers are going deeper with the Teams opportunity, Microsoft channel chief Gavriella Schuster said during an interview in July.

“Where we’ve seen real success is when the partners can come in, and do the adoption and change management around true collaboration—helping customers really understand how to share documents, how to do the white-boarding, how to more effectively engage on an ongoing basis—and go beyond meetings and chat,” said Schuster, corporate vice president for Microsoft’s One Commercial Partner organization.

At St. Louis-based Perficient, No. 55 on the 2020 CRN Solution Provider 500, a global real-estate customer needed to accelerate its Teams deployment amid the shift to remote work earlier this year. While the project to get the customer’s 90,000 users onto Teams began in February, “when everything went down in March, that’s when we had to totally turn the boat to the left and change our strategy,” said Ron Jones, practice director for Microsoft modern productivity at Perficient.

For the real-estate customer—which was seeking to standardize on Teams and eliminate other tools such as Skype for Business— Perficient needed to expedite its technical governance work as well as its delivery of adoption and change management services.

The full deployment of Teams for the customer was completed in June, months ahead of the original schedule, and it’s just one of the many Teams projects Perficient has completed in recent months. Nearly 100 percent of Perficient customers now have Teams deployed, compared with 60 percent prior to the pandemic, Jones said. And the revenue opportunities have been countless.

“First are your professional services. Those services can be around a strategy, a road map, a security engagement, a tenant-to-tenant migration, change management. Then there’s technical enablement—which is helping users with the technology on a department by department level,” Jones said. “Then you can take it to the next level by bringing in the apps that customers care about, both on-prem and in the cloud. That’s the real sweet spot that people are starting to look to now. That’s where you start to talk about Teams as a platform.”

Deploying Teams calling capabilities is another emerging opportunity that many solution providers cited.

“What I’m really excited about is the calling portion of this,” Jones said. “That can mean replacing calling systems. And those are very complex projects, and not everyone’s equipped to do those, but thankfully we are.”

Meanwhile, security is a top priority with the emergence of Teams as a central hub for work—creating additional services opportunities for many solution providers.

Security is “a great use case where we see an ability to generate revenue from Teams,” said Matt Dierolf, enterprise architect at Blue Bell, Pa.-based Anexinet, No. 212 on the 2020 CRN Solution Provider 500. For Anexinet, revenue opportunities have included consulting services to implement Teams security for customers, as well as recurring revenue from managed services to stay on top of security controls, he said.

“There’s SharePoint within Teams, there’s chat, there are all sorts of things that are compliance-related. We help customers set up controls around that,” Dierolf said. “We make sure the chats are logged and that they have DLP enabled so that the content doesn’t go where they don’t want it to go.”

Teams security engagements for Anexinet have included work for a large manufacturing customer, where most of its IP is intellectual knowledge rather than patents. “We make sure they can track where their data is going,” Dierolf said.

Making a profitable business out of Teams is also realistic for smaller MSPs. Third-party software such as AvePoint enables MSPs to simplify and automate the delivery of many Teams services.

Matthew Bookspan, CEO of Blacktip, an Altamonte Springs, Fla.-based MSP, said his company has been providing services such as Teams backup to SMBs with the help of AvePoint’s offering.

“What we do is we sell you the Blacktip version of Microsoft 365 Business Premium. So that has a higher price point because it has these additional value-added services that are all integrated. And our clients love it because they don’t have to think about it,” Bookspan said. “At this point we’ve migrated everybody [in the customer base] to Teams.”

At Houston-based EPC Group, meanwhile, in the first three months of the COVID-19 crisis the solution provider performed implementations of Teams for several hundred customers. It moved internal resources into a COVID-19 task force “to get Teams going,” said Errin O’Connor, founder and chief architect.

“We had all hands-on deck. We were working 18-hour days, and Saturdays and Sundays, going through and doing Teams implementations. Obviously there was a lot of revenue coming in,” O’Connor said. “But we also did that because our clients were just saying, ‘We’re desperate. We’re in trouble here.’”

Like Teams and Zoom, Cisco’s Webex collaboration platform has been driving growth opportunities for solution providers.

Force 3, a Crofton, Md.-based Cisco Gold Partner, counts several large U.S. government entities as customers. Nearly overnight, those customers have gone from slowly testing and piloting technology in small groups to rolling out videoconferencing to tens of thousands of users. As a result, Force3’s collaboration revenue went from “stagnant” to “accelerated,” said Jason Parry, senior vice president of federal.

Force 3’s customers are using Cisco Webex not only to empower employees working from home, but for workers who had to remain in the office—and now, for those returning. The platform is helping them organize their common spaces to ensure social distancing, Parry said.

“We’ve had requests for large-scale video environments that allow employees not to leave their desks,” he said. “And we’re seeing demand for video endpoints increase for senior individuals that want a high-def experience.”

Force 3 also is helping to wrap security services around Webex and is boosting adoption by helping customers integrate collaboration within day-to-day business practices. Force 3 in July won a 50,000-seat enterprise collaboration deal and is working to increase user adoption of Webex within that organization, Parry said.

“A big part of that is helping that customer leverage the capabilities they bought and improving the way they do business,” he said. “This way, you start to move from pure technology consultant to more of a business partner.”

Cisco Webex, which now includes calling, video and messaging, has more than 500 million meeting participants and is logging “well over” 70 billion meeting minutes a quarter, which is a year-over-year usage increase of more than three times, according to San Jose, Calif.-based Cisco Systems in an email to CRN in September.

The channel stalwart has more than 60,000 global partners and about 85 percent of revenue comes from the channel, according to the company. Channel chief Oliver Tuszik said he’s proud of how quickly the company mobilized early in the pandemic to get partners what they needed.

“Webex and all of the key offers provided to partners and customers have become the cornerstone to our customers’ business resiliency. Through Webex and the security built into the platform, partners have been able to not only capture immediate revenue, but also position themselves to accelerate profitable growth through recurring revenue and managed services as customers continue to realize the full power of their initial IT investments,” Tuszik, senior vice president of Cisco’s Global Partner Organization, told CRN.

Core Business Technology Solutions (Core BTS), a Cisco Gold partner, has a large collaboration business, especially in the K-12 and higher-education space. Much of that business is being driven by Cisco Webex sales, said Taki Gikakis, national practice director, collaboration, for Core BTS.

Core BTS has taken advantage of Cisco’s CX strategy, a focus the tech giant has been building up over the past three years around life cycle and customer success that rewards partners for staying involved with end users after the initial sale.

“We are constantly engaged with customers,” he said. “Not only are we helping the customer, which is the most important thing, but we’re getting paid for it as well.”

Connecting with customers on a daily basis—especially those coming off free 90-day trials—is crucial to keeping the collaboration revenue flowing, Gikakis said. In fact, Core BTS has tracked every customer on a free Webex trial to provide additional resources and adoption support for all of the platform’s features, such as single sign-on. Webex trials can scale to support 1,000 users, but Core BTS scaled to support 2,000 users for two school districts to help them get the most out of the product during their trial periods.

“Some choose to go with the technology, and some don’t. For the ones that didn’t convert, revisit every single one of them because they still need a solution,” Gikakis said. “If they know we are there for them no matter what and aren’t just trying to make one sale, that really resonates.”