A Road to Success Under Construction CTI...

By SmallBusinessComputing Staff | Posted May 01, 2000

by Madeline Bodin

Lisa Monroe runs a successful systems integration business in Powell, Tennessee. She has cultivated a deep relationship with her clients, who seem to respect the knowledge and skill her firm represented.

Why then, did she mess with success three years ago, adding computer-telephone integration (CTI) services to her business? Telecommunications was a new technology for her and her staff, and the learning curve was steep. The CTI industry, still in its infancy, seemed to be cranking out as many lemons as innovative products. So why did she bother?

"To be more competitive," says Monroe. "Not many companies know how to do both, and it has been a differentiation from a competitive standpoint." Also, Monroe's firm, Business Technology Solutions, Inc, is strong in two vertical markets: healthcare and point-of-sale. Being able to provide both computer and telephone services has boosted the firm's ability to work in those markets.

Firms like Monroe's are grabbing a hefty slice of a rapidly expanding pie. The CTI market has grown rapidly in the last three years. H.C. Wainwright & Co., a research firm, expects the good times to continue. They see the CTI market growing from a few billion today to $25 billion over the next five years.

And the margins for the VARs and systems integrators selling in the CTI market are said to be spectacular. "A 15-percent margin is typical for computer VARS," says Pamela Avila, executive director of the trade group CT Pioneers. "The margins are 75 to 100 percent for convergence technology." (While the definition of CTI can be pretty strict, the term "convergence technology" is broader and includes everything referred to as CTI technology in this article.)

Sounds like a sure bet? Not so fast. While a rapidly growing market with high margins and little competition sounds like an invitation to jump in with both feet, companies that don't look before they leap into CTI can find themselves landing hard, covered with bumps and bruises.

What Is This Stuff?
Computer telephone integration, or CTI, is a term that includes many different applications and technologies. A "screen pop" is the stereotypical application, and we'll explain more about it later, but CTI also means unified messaging, fax servers and fax-on-demand systems, server-based telephone systems, intelligent routing, IP telephony, interactive voice response (IVR), and applications that haven't been dreamed up yet. What all of these applications have in common is a computer and a telephone system working together.

If you've ever called Federal Express or ordered from L.L. Bean, the chances are good that you've experienced CTI in action. (Neither company uses CTI in all its call centers, so not every caller has a "CTI experience.") When you call L.L. Bean and you are not asked for the "LL number" from the back of your catalog, yet the customer service rep already knows your address, it's not that you've called so often the rep knows you personally, it's the ever-popular "screen pop." That is CTI at work.

Most screen pop applications work like this: When the phone rings, the telephone number is delivered to the company's computer system, which looks it up in a database. If the number is already in the database (most likely from a previous call from that number), a screen of information about the caller will appear on the customer service rep's screen as she answers the call.

The information that appears on that screen is determined by the company. From the caller's perspective, you can tell that L.L. Bean (or FedEx) provides your address to the customer service rep. A wise company would also provide information about past orders, including what was ordered, how it was paid for, and what was returned. (But a wise company also doesn't let its reps reveal what's on their screens. It just lets the conversation unfold naturally.)

Screen pops have been used in large call centers for years. What's new is that these technologies are now available to small and mid-size businesses. For example, Goldmine and ACT, two popular contact-management software packages, offer screen pops as an option, putting the ability to do screen pops into the hands of every small sales department that can manage to make it work.

That's where the opportunity for the computer VAR comes in. CTI applications are, by their very nature, customized applications, and to make them work, you need expertise in both telecommunications and MIS. A small business that is squeamish about installing a PC board that can receive Caller ID information is already in over its head with the simplest CTI application.

If you already know the MIS side of things, you are half way home.

Potholes In The Road
A VAR with a strong computer background already has half of the technical knowledge needed to be a successful CT integrator. But if you catch yourself thinking that the other half is the easy half, think again.

Because of the industry's unusual history (long a monopoly, then some competition and limited monopolies, then total chaos ­ er, competition, with a future pointing toward conglomeration) the body of technical knowledge in telecommunications can be compared to a large attic, where new stuff is added every day, but nothing is ever thrown out.

The local telephone company (usually a Bell company, but not always) that you will have to deal with to offer CTI services is huge and bureaucratic, and is probably still using a few procedures created by Alexander Graham himself. But whether you consider the telecom industry stodgy and old-fashioned, or brilliant for preserving those huge margins, you still have to understand it before you can succeed in CTI.

Don't forget, the desktop interface for the telephone has changed just three times in 123 years (crank and talk to operator, rotary dial, and touchtone) ­ and some people are still griping about that last change. It represents some very deeply rooted habits and expectations.

"You need to learn what organizations want telephone systems to do for them," says Laino. "Even if you are going to replace the phone system with something that's going to make them say 'wow,' they will absolutely hate it if it doesn't do the old things well."

The obvious way around the need for all this new knowledge is to partner with an interconnect ­ the telephone industry equivalent of a VAR. But be warned, the industry already teems with bad and broken marriages made with this goal in mind.

"I tried to team up with a telephone business," says Gregory Wood of Farsight Computer, an Odessa, Texas-based VAR. "There was enough suspicion that I was not successful in finding a good match. The other companies came in, learned all they could about us, then they weren't interested in partnering." Avila says that Wood's experience is a typical one among CT Pioneers' members.

She also points out that CTI requires a different selling strategy than what is now commonly practiced in either the computer or the telecom industry. CTI requires true solutions-selling, something both industries only give lip-service to, she says. "The computer industry says they have been solutions-selling for a long time, but they are still just pushing boxes. On the telecom side, what passes for solutions-selling is really features-and-benefits selling."

Avila notes that telecom salespeople are used to making several consultative sales calls before they close a deal. The margins on a telecom system sale cover this hand-holding. Most VARs, working on tight margins, expect the customer to pay for everything they get, including consulting. CTI sales more closely follow the telecom model.

Even when a VAR is familiar with telecom technology, as Wood was, those first sales can be shocking.

""Those first couple of bids we went out on, we really looked like babes in the woods," he says. "We lacked skills in bid preparation and how things should be packaged and sold."

Monroe's first reality check was finding out that some "open" systems that were supposed to be compatible with everything actually weren't. She says the industry has come a long way since 1996, when her firm first discovered that things were not always as they expected them to be. But consider yourself warned, the standards that the CTI industry is based on are sometimes not that standard.

The road to becoming a CT integrator is not a smooth one, but don't forget that the bumps in the road just might scare off your competitors. CTI is a growing market with high margins, and the VARs who have stuck with it believe the future gain is worth the present pain.

5 Small Steps for VAR-kind
Adding telecommunications skills to your computer skills to become a CT integrator may not be a walk in the park, but it's not impossible either. Others have done it and left a few breadcrumbs to follow on the trail to success. Here's what works:

* Hire, merge, or acquire. The single most important thing a computer VAR must do to enter the CTI market is to hire employees with telecom knowledge or a mix of telecom and computer knowledge, or find the right company to form a joint venture with, advises Wood.

"We've found that partnering is only a short term solution," says Avila of CT Pioneers. "Our members are finding they are better off buying another company that has the other side of the picture or getting into a tight partnership with them."

Not all VARs have failed in partnerships with interconnects or other telephone companies. Monroe works with several telephone shops in the Knoxville, Tenn,. area and reports good results. She admits she is better than most at building business relationships, and that may be the cause of her success.

But for most VARs, the fastest way to the summit of the learning curve is by hiring experienced employees, merging with an interconnect, or buying one.

* Get training, step by step. That doesn't mean you and your staff are going to avoid training, or investing the money and time you'll have to spend on it. Everyone who is going to work on CTI accounts, from salespeople to technicians to management, needs to understand what exactly it is they are working on.

Once telecom training meant going away for two weeks, spending $10,000 and returning an all-knowing telecom guru, says Marks. That's a scary prospect when you've got a business to run. New training options mean you can add one skill at a time.

Marks is intrigued with the MultiMedia Telecommunication Association's (MMTA) Certified Convergence Technologies Technicians CD-ROM based course offered through Applied Learning Systems. The course costs $399.99 for MMTA members and $449.99 for non-members.

"The investment in time and dollars is not huge up front," Marks says. "After completing this or a similar entry-level training course, you can look at the business opportunities that exist at that level of training." If things go well, you can start training for the next level.

* Tackle the familiar first. "As a computer person, I find myself dealing with telephones, POTS, Internet, and wide-area network problems. It's not that much of a stretch to working with my clients' telephone systems," says Wood.

For some VARs, adding telephone skills is a natural progression in the direction their business is already going. For others a wide gulf looms between the work they do now and the work they will be doing as CT integrators.

"Breaking your fear into manageable chunks" applies to the work you take on, as well as the training you complete. Marks points out that for most computer VARs, installing a fax server or a fax-on-demand system is not a stretch. It's a server. It's data. Familiar ground. Yet, this application is considered CTI. You've made your first step.

"Do you provide LAN and Internet services to any of your customers?" asks Marks. "Find out if these customers have offices in several locations. If they do, selling them a voice-over IP system is an opportunity for you that offers them immediate financial savings."

Sell and install an IP telephony system, and you've made your second step.

From there it's no big leap to tie e-mail to voice mail. Marks says unified messaging is a good third step. By the time you reach server-based telephone systems, you have arrived as a full-fledged CT integrator, and you are still using what you know about servers and networks.

* Find some friends. "We have been working together under the premise that two heads are better than one," says Avila of the CT Pioneers, which provides training, partnership information, and product information, but most importantly, provides a community of non-competing companies who are having the same CTI growing pains.

Monroe found her membership in the CT Pioneers valuable for steering her away from products with compatibility problems. "Some of the other CT Pioneers have tested these products through hard knocks. Through their hard knocks and lost dollars, we've bypassed that step."

But before you consider joining a trade association, meet your peers at a trade show, say Avila, Monroe, and Wood. Listening to talks by manufacturers and experienced CT integrators, and prowling the aisles for intriguing products are the best ways to learn the basics and to figure out if CTI is a good market for you.

* Learn new sales tricks. Even if you think your firm already practices the solutions-selling so vital to success in the CTI marketplace, brushing up on your sales technique can't hurt.

Monroe gives some of the credit for her firm's success in selling CTI products and services to a particular sales training program she attended. "It's a totally different way of looking at sales," she says. "You uncover the issues, the budget, and if they are a fit for a computer telephone integration solution all up front. It's helped in all different areas of the business."

The work you do on solutions-selling will help even if you never make the CTI plunge, says Wood. "The days of someone saying 'I want a computer' or 'I want a phone system' and handing you a set of specs is ending," he says. "If we take the time to learn more about the customer's business, it pays dividends in getting that person's business."

CTI is all about creating custom solutions for business problems. It requires knowledge in both computer and telecommunications technology ­ but it also requires the ability to work with your customers to find solutions that work. Wood, like many computer VARs who have made a go of CTI, sees the technology playing a major role in his business in the long term.

Wood's view of the future of the industry should be the motto for all CT integrators, "If you solve their problems, more of their systems fall into your hands."


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