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Can startups be in the unified communications vendor selection process?

Using a startup unified communications vendor offers some rewards, but you must mitigate your risks with a thorough vendor selection process.

This is the first story in a two-part series on evaluating startups for your unified communications vendor selection process. Check out the second part of the series for cautionary tales from some UC pros whose gamble on a startup unified communications vendor backfired.

Some things in life are worth taking chances on; your unified communications (UC) vendor selection process is not one of them. Startup UC vendors entice enterprises with their more progressive and agile approaches to communications in a market where large incumbent vendors are slower to innovate, but enterprises are hesitant to risk investing in products that may become obsolete if the startup folds or gets bought out. Not every UC startup experience ends in misery, but success depends on thorough planning.

Some enterprises gravitate toward startup unified communications vendors because they specialize in specific technologies, which often translates into a higher-quality product.

During his vendor selection process for a recent fixed-mobile convergence (FMC) project, Paul Pataky had not intended to work with a startup UC vendor.

Two years ago, Pataky, supervisor of IT infrastructure at S&C Electric Company, an electrical power systems equipment manufacturer based in Chicago, needed to replace S&C's outdated radio paging system with a wireless voice over IP (VoIP) network that supported cellular networks and his Cisco Systems' wireless LAN (WLAN). Ubiquitous voice connectivity across the company's 45-acre campus was especially important for S&C's emergency response team, he said.

At first, he switched 85 users from AT&T to T-Mobile USA, which was offering smartphones with native FMC functionality, a move he would later regret.

"We discovered they don't play well with the Cisco wireless network that we have," Pataky said of the T-Mobile phones. "You could be at your desk talking, then turn your chair and the wireless network call got dropped."

His first instinct was to look at incumbent vendor Cisco's FMC product, he said. But at the time, it was "complicated" to set up, and it only worked with BlackBerry smartphones.

By networking with peers at other companies, Pataky heard about a successful FMC project at Anthony Marano Company, a large, Chicago-based produce distributor. The project involved Agito Networks, an FMC startup founded in 2006 by two former Cisco employees.

Talking to IT pros at Anthony Marano and seeing their successful deployment motivated Pataky to take a chance on a startup UC vendor. His team also spoke with Gartner Inc. analysts about the project and Agito's strength in the market.

"Having gone through that kind of research makes us a little more comfortable with the decision," he said.

In retrospect, Pataky said, he should have asked his finance department to run a credit check on Agito during the vendor selection process, but he felt he had some investment protection with some of the legacy T-Mobile devices still available if Agito were to fold tomorrow. And Agito hasn't raised any cause for concern so far.

"The best advice I could give is to request multiple references from the supplier and visit with each one to see the solution in action, the size of the implementation, and understand their experiences with the product, service and support," Pataky said. "If I can see that a larger implementation has gone well and support has been exemplary, this puts my mind at ease."

UC startups can offer savings but require caution

Some startups try to gain an edge in the unified communications vendor selection process by offering lower prices than incumbent vendors. A low price can make the startup worth the risk for non-critical communications and at smaller enterprises.

"Being in IT, that's always a concern: Are you going to be there tomorrow? Are you going to be there next year?" said Ed Garcia, IT director at Horn Group, a San Francisco-based public relations firm.

Their demonstrations and the product itself was so far above what other established [vendors] had done that I was so far sold before I even knew it was a startup.


Julie Gebert
Assistant Vice President of Compliance, Cambridge Investment Research

For the past six months, Garcia has been rolling out Skype for Business -- the enterprise-grade product from the Web-based VoIP provider -- across desktops and conference rooms at his two branches as his primary video conferencing system.

Skype has replaced his legacy Polycom system, which Garcia eventually abandoned because of its complexity, growing total cost of ownership (TCO) and poor adoption among users. Because users were familiar with Skype, its mostly free consumer service, they were more tolerant of Skype for Business's limitations compared with sleeker video conferencing systems, Garcia said.

"What matters to my [users] is the ease of use, the value and the quality," he said. "And Skype has gotten better compared to several years ago, in terms of video quality. There's no point for me to evaluate a $10,000 product. I'm sure it's different for different sizes of organizations. We're a small company, so … we're more forgiving if it doesn't work. I'm not going to get fired if it doesn't."

Even so, choosing a startup in the vendor selection process is always a risk, according to Garcia, who acknowledged that he has been burned before by failed startups. But that risk can be minimized by doing online research, talking to peers who use the product, and sticking with incumbents for business-critical applications.

"I kind of learned my lesson [from past experience], so next time around, I spent a lot more effort on the research and reference calls," Garcia said. "Let's say Skype goes away tomorrow. The [investment] risk for me is nil."

When startups are the only choice in the UC vendor selection process

Then there are the times when an enterprise's UC needs are so specialized or beyond incumbents' offerings that the vendor selection process boils down to just a few startups.

When a committee of young financial advisors at Cambridge Investment Research (CIR) wanted to use popular social media sites to promote their products, compliance and IT pros had to block the initiative. Federal regulations made such a move too risky, according to Julie Gebert, assistant vice president of compliance at CIR, a financial firm based in Fairfield, Iowa.

"The only way to really do that was through a third-party provider that was going to be able to monitor the content and archive it for us," Gebert said, noting that none of her existing vendors delivered anything like that.

With such slim pickings from incumbents during CIR's vendor selection process, about half of the firms Gebert evaluated were startups, including Socialware, a small, Austin, Texas-based Software as a Service (SaaS) vendor founded in 2008, which provides "middleware" between clients and popular social media sites for security and archiving.

Gebert acknowledged that she had not realized how young Socialware was at first. But after the startup scored high marks during her "vendor due diligence program," she cared more about Socialware's ability to deliver on its promised features than its status as a startup.

"Truthfully, the materials that they have provided, their demonstrations and the product itself was so far above what other established [vendors] had done that I was so far sold before I even knew it was a startup," she said. "It wasn't even something that mattered at that point in time."

To protect its investment, CIR negotiated support terms in its contract with Socialware in the event of an acquisition, Gebert said, and she has few concerns about a merger upending CIR's investment.

"That happens with all of our vendors all the time," she said. "There are so many that end up merging [or] being acquired, so that's just the reality of the business."

Let us know what you think about the story; email: Jessica Scarpati, News Writer

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