As we exit the summer of 2004, it is clear that the supply side of our industry (vendors and service providers) has been re-focused from cost cutting to growing revenues. But with some exceptions, we have yet to see the demand side--the business buyers (enterprises, medium, small nor SOHO businesses)--getting with the program and massively acquiring the new products, services, applications and solutions that the suppliers are offering for sale.

Why? The answer is not likely to be simple. Perhaps the question isn’t “What are the suppliers selling?” but rather “Do the buyers perceive value in what the suppliers are offering?” Let’s explore and contrast the sales pitches of two new technologies striving to become major revenue growth generators for the suppliers.

The examples are voice over IP and Wi-Fi, which are both receiving their share of attention and will certainly, ultimately, be successful in the market. While both are potentially explosive market opportunities, they are also significantly different. VoIP is a market transformation that is replacing a previous generation of technology: TDM telephony. While wireless data is certainly not a new technology, the timing for Wi-Fi take-up is quixotically fortunate--everyone sees a benefit to mobility, the standards came on-stream and the chip industry enabled rapid take-up by forward pricing in anticipation of large volumes. So let’s look at how VoIP and WiFi are being sold to enterprises.

Without singling out any supplier, the messaging around enterprise VoIP is often something like the following: “VoIP is the future of telephone service available today.” “VoIP is the convergence of voice and data networks onto a common IP infrastructure.” “VoIP will reduce TCO and provide a favorable ROI.” “With VoIP, unified (or multimedia) messaging improves worker productivity by having all messaging in a common mailbox that can be accessed, translated and presented in the proper mode based upon the device “reading” the message.” “Because VoIP is location-independent, users can be mobile and use the system from wherever they are.” “VoIP can be delivered in any combination of configurations--as a hosted or managed service or as an IP-PBX.”

Now that I think about it, it doesn’t surprise me that, given the above sales messaging, the average business buyer is saying that they believe they will buy VoIP someday. But they are still waiting for a compelling reason--like a new location, a reorganization, an M&A transaction or, simply, the end-of-life of their company’s existing system--to make the change. Or they may say “I’ll try it at some location in my network to prove-it-in and learn about it, but I’m not compelled to rip-and-replace everywhere.” 

I acknowledge that there are certainly some exceptions that can be cited to this overall reluctance to commit now, where a business has developed a compelling reason to adopt VoIP company-wide and they are experiencing benefits. And we can surely find some glowing case studies of such organizations on several happy vendors’ Web sites. In many of the cases it was the enterprise customer itself, not the vendor’s sales pitch, that uncovered the compelling reason--the business benefit--that made the decision to adopt VoIP NOW!

Wi-Fi is somewhat similar to VoIP in that the messaging being used by suppliers to sell to businesses pushes the technology and the operational and cost benefits. However, the initial explosion of Wi-Fi was not in the enterprise but in the home; actually, the home offices of many enterprise workers, or maybe in a hot spot around their morning java. Thus, the enterprise user has, to some extent, become pre-conditioned to the benefits of Wi-Fi before they had to consider a wireless LAN in their business.

WLAN suppliers have used these “consumer” mobility experiences as part of their enterprise sales pitch. Their messaging frequently touts benefits such as mobility, faster, easier deployment with no need to pull additional cable and ROI benefits. And some businesses have been buying Wi-Fi based upon these “administrative” arguments. 

Interestingly, business Wi-Fi is also being sold by identifying the direct benefits to the user’s business (either functional improvement to an organization, or better industry-specific business operations) facilitated by using a wireless device (largely a data device but also adding voice-over-Wi-Fi devices). And some of the Wi-Fi suppliers have even built their initial marketing models around providing specific user benefits in specific business functions or vertical industries. One major category of this user-benefit marketing model has been offering WLAN capabilities to improve the performance of a business by facilitating mobile workers in recording time-critical information (as in package delivery, retail or warehousing operations or healthcare) and transmitting it into the businesses critical management applications that enable key business differentiators (such a real-time package tracking or retail inventory management or saving lives).

So the question for technology suppliers is this: Do you want to continue to be like Sisyphus and push your solution up a mountain, against gravity?  Or do you want to begin to take a different road and follow your customer where they want to go--improving their business performance? Hopefully, we will see a stronger resurgence in user benefit selling/vertical industry marketing for both VoIP and WLAN. Maybe even other emerging technologies will be adopted more quickly, and the industry’s suppliers will reach their goal of improving profits by increasing revenues--a great hope for the rest of 2004 and into 2005.

David H. Yedwab is the Executive Vice President of The Eastern Management Group and can be reached at dyedwab@easternmanagement.com.