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Mitel's Next Chapter: Leadership in Hybrid Communications

• Evan Kirstel

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Mitel stands at a pivotal moment in its 50-year journey, emerging stronger than ever after strategic moves that have positioned the company as a formidable player in hybrid communications. In this candid conversation, we explore how Mitel's recent acquisition of Unify has created the largest global install base in the industry, while a smart financial restructuring eliminates debt constraints and unleashes new agility to pursue innovation.

The myth of the "one perfect solution" for business communications is thoroughly debunked as we dive into why 92% of IT leaders across major markets are embracing hybrid approaches. For some organizations, compliance mandates on-premises solutions for certain functions, while others face risk profiles or legacy investments that require methodical transitions. The wisdom lies in matching the right deployment models to specific business needs rather than forcing a one-size-fits-all approach.

We explore Mitel's strategic partnerships with industry powerhouses Zoom and Genesys, already yielding impressive results with a 21,000-seat European deployment just days after general availability. These collaborations complement Mitel's robust portfolio of innovations at the hardware-software intersection, including Workflow Studio for low-code AI implementations, mission-critical "Expert" solutions for specialized environments, and AI-enabled headsets that transform frontline worker experiences.

What truly sets Mitel apart is their holistic perspective that extends beyond conventional unified communications to embrace comprehensive workforce experiences. By recognizing that 65-75% of workers are specialized frontline personnel with distinct needs from knowledge workers, Mitel creates inclusive environments where entire organizations can collaborate seamlessly regardless of role or location.

Ready to discover how the right communications strategy can transform your business? Experience Mitel's innovations firsthand and see why the future belongs to organizations that embrace the power of hybrid flexibility.

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Speaker 1:

Hey everybody, it's the week of Enterprise Connect, the annual get-together with industry players, including a well-known industry player, mitel Eric. How are you?

Speaker 2:

Doing great. Evan, Great to see you.

Speaker 1:

Great to see you Busy week ahead for the annual family reunion almost at Enterprise Connect. Before that, maybe some introductions for those few people who haven't heard of Mitel and its really interesting storied history. How do you describe yourself these days?

Speaker 2:

Yeah, no thanks, evan, and I really appreciate you having me on the show this week. So Mitel is a unified communications player been around for over 50 years now, leader in the industry. About a year ago, we acquired a company called Unify, which basically put us in the position where we have the largest install base in terms of seats globally and really, really excited to be with you and talk a little bit about what we'll be doing next week.

Speaker 1:

Well, thanks so much, and it's really interesting timing, not just for the industry and the opportunity, but also you've had some big news about restructuring financially. For those non-finance geeks, maybe you can explain what's going on and what it means for the company moving forward.

Speaker 2:

Sure sure, what we announced this past week is a really positive milestone for the company and while we've had a very successful and profitable business operationally.

Speaker 2:

you know we had some debt and capital structure that we needed to address just in terms of improving things.

Speaker 2:

And so you know, really you know, given the momentum that we've seen over the last year, that really helped us. You know, relative to human hybrid communications, it really helped us work closely with our lenders to proactively come to an agreement and a prepackaged agreement and a process, which we entered on Monday, that's going to ensure us to be able to basically move forward, recapitalize our financial structure, eliminate a bunch of debt, reduce our annual interest payments pretty dramatically, and that's really going to give us the agility we need to capitalize on the market opportunity that we see before us. We've had a lot of very large sort of north of $10 million hybrid style deals over the last year. So the business is there. Mitel is very well positioned for it. But one of the things that we needed is we needed that flexibility and agility to really capitalize on the opportunity, continue to invest in everyday innovation, continue to invest in sort of modernizing and transforming our go-to-market to take advantage of those opportunities.

Speaker 2:

So very, very positive step. These restructuring processes can be a little spooky for people because it was a prepackaged agreement with our lenders and the nature by which the process that we sort of initiated through the court system with Chapter 11, it's really enabling us to move swiftly. We expect to be out of this process within 90 days. We've already reached the first milestone where the court has approved everything that we're doing. What that means is zero impact to employees, no impact to customers, no impact to partners, no impact to vendors. It really is sort of a financial exercise in terms of restructuring our finances so that we can continue to invest in the business and move more quickly.

Speaker 1:

Well, good to know. So, on the business front, really exciting times and we're going to dive in. Hybrid cloud and hybrid communications is a big theme in the industry right now and something you're squarely positioned for at Mitel. Enterprises are looking more to a hybrid option versus a fully, you know, hyperscaler, cloud-based solutions, and what's some of the thinking behind that requirement?

Speaker 2:

Yeah, no, it's a great question and it's a great time in our industry, I think, to reevaluate maybe some of the hype over the last few years of, you know, final Destination being, you know, a pure solution one direction or another.

Speaker 2:

I think you know coming post one direction or another, I think you know coming post-pandemic, and organizations really looking at what their needs are. We all know that no two organizations are the same and you know the needs of one is very different than the needs of another, especially when you talk about larger organizations and more demanding industries, or demanding geographies, for that matter. Right, and so I think the way that we think about hybrid and seems to be very well received by the market and certainly seeing that momentum over the last year, is that you know a combination of everything really makes sense to varying degrees by organization. So you know, for some, some parts of their business, you know a UCaaS or CCaaS solution may be the perfect fit for them and for others, based on whether it's for compliance reasons, you know where they need to have it. If you will, they will need some aspect of potentially PRAM or private cloud, dedicated instance type of deployments for certain part of their communications infrastructure, again for compliance reasons.

Speaker 2:

Then we think that there are those types of organizations that we call it want to have it, where their risk profile or preference is more similar to what we call the need to have it, that are kind of guided by compliance because they're worried about business continuity, whether that's tied to security or other factors like natural disaster, as an example, right, and then, of course, you know there's the third category, which is I like to call path of least resistance which are really those customers that are.

Speaker 2:

You know they want to move to some sort of future state, but they've got significant investment in current infrastructure and so they want to be a little more methodical as they move from that current state to either you know a full migration path, maybe to UCaaS or CCaaS, or they wanted some blend of you know all sorts of different deployment models, while maintaining a consistent sort of front end experience for their users and the ability to adopt some of the emerging technologies like AI, right?

Speaker 2:

So that's really what we're seeing. We did a tech aisle survey this last year, and what we found in the 2000 people that were surveyed in the study is that, you know, in Germany, uk, france and the US, what we found is that 92% of those surveyed IT leaders, decision makers, were really looking for more of that style of strategy, and, again, that was to give them that control over the adoption of new technology, control over the pace at which they move to a future state, or control over their you know kind of resilience and security, you know kind of path for mitigating those things, right? So so those are we are seeing are the primary drivers.

Speaker 1:

Fantastic. So in the meantime, the competitive landscape is highly competitive, as always, and many of your competitors have either exited the market or been acquired. So how do you see that landscape evolving and your position?

Speaker 2:

therein. For some organizations, especially those that we compete with, that are more pure UCAS or CCAS players. They've got a hammer and so therefore, every problem that a customer presents looks like a nail. I think our approach is a little bit different, and we believe that UCAS and CCAS are obviously one critical component in terms of an overall strategy for business communications, again depending upon what type of organization you are. So for us it's really a portfolio strategy that combines sort of the best of all those worlds you know and then does the right thing based on the problems that a customer needs to solve. And the great thing is we have a very robust. You know, 25% of our organization is in professional services, so we have a lot of large organizations. We're actually providing managed services, not just professional services, for their environments where they wanted to outsource their communications infrastructure to us.

Speaker 1:

So when you think about it from that perspective.

Speaker 2:

It really gives us a level of flexibility that's unparalleled compared to some of the as-a-service players in terms of really being able to sort of surround and support the business requirements with the right tool for the right job right, and so I think that gives us a real advantage and, I think, relative to some of the other competitors out there with a similar heritage to Mitel, they're obviously doing what's right for their business, based on focusing on certain aspects of their business. So if you've got any seed that's exited the market, they're doing that because of their broader portfolio. This no longer made sense for their business strategy. You look at others where they're narrowing their focus. That's again what makes sense for their business strategy. For us, we're really doubling down on our strengths. We see the momentum based on what we're seeing in the field, and so we really are excited about continuing to invest in that and continuing to execute against the strategy.

Speaker 1:

Brilliant. So your partnership with Zoom and Genesis really caught my attention to great tech companies in their space. You know what were some of the advantages you saw in those partnerships and what do you anticipate for customers.

Speaker 2:

Yeah, so you know, I think the two partnerships are a little bit different than one another. I think, you know, with the Genesis relationship, we had a past relationship with them in the field, with some specific customers, where we were providing a level of managed services for those environments, as those organizations were maybe moving from Genesis Prem and into Genesis Cloud, and so it made a lot of sense to expand that relationship from that perspective. You know, and that's a little bit different than what we've done with Zoom. And in the case of Zoom, you know, again, we really believe, you know, in terms of the hybrid experience, and as part of that hybrid experience, we felt like it was important to be able to provide a best-in-class visual collaboration component that's AI-enabled, and we really believed that what Zoom has done on that front is industry-leading, and so it really made sense to add that to the portfolio, and that's part of why we made the investment that we did with Zoom in terms of co-developing that hybrid experience, and so we're really excited about that.

Speaker 2:

Actually, I was at Zoom's sales kickoff this last week and had the opportunity to present to their sales force and was very well received. We've actually already landed our first big win, even though we just went GA a week ago. 21,000 seats in Europe with an existing Mitel customer and the overall Mitel environment is about 70,000 seats. So very excited and of course they're very excited to see that type of momentum right out of the gate with the new relationship.

Speaker 2:

So, we're really looking forward to the things that we can do together as we think about, obviously, sort of the needs of the knowledge workers, the needs where there's visual collaboration requirements and really complementing those specialized frontline worker scenarios, whether it's emergency services, transportation and logistics type scenarios where mission critical communications is really important that too, and so we believe that together we have a far greater likelihood of positively impacting the customer condition and enabling them really to thrive in whatever business they have.

Speaker 1:

That's good timing, I mean certainly customer expectations for those kind of seamless experiences are rising and all kinds of new ways in which businesses are dealing and engaging with their customers. What are they telling you in terms of their requirements and needs for CX over the next year?

Speaker 2:

Yeah for sure. On the contact center side, what we're hearing is a couple of things. Number one again I probably sound a little bit like a broken record, but right tool for the right job, right. And I think for those of us that have worked with larger organizations, you realize that they can be made up of a number of different business units. Each of those business units, in the case of a CX-type, experience can vary and I've seen a lot of organizations where they need more than one type of solution, because this solution is purpose-built or a good fit for this line of business but maybe is overkill for another line of business and vice versa. I've seen that a lot actually in large enterprise.

Speaker 2:

So I think what they're looking for is they're looking for a partner that can help them arrive at the right conclusions that make sense and can bring the right solutions, and they can actually stitch it all together and make it work. And I think that even more than you see.

Speaker 2:

You know for CX experiences. That's a really a prevalent thing. You know, when you think about it, that's one of the primary interfaces between a brand and its customers, right? So obviously you want that to be right and you know the talent that is addressing those needs. They need to be coached, they need to be, in some cases, upskilled, they need to be more productive, and certainly the things that we're doing from an innovation perspective as an industry and also at Mitel around AI and how we increase that productivity at an agent level to optimize skills, as well as obviously taking advantage of things like virtual agents and so forth for those things that are more repetitive. I think those are all the kind of critical surface area things that organizations are sort of demanding, but again, they want help figuring out how to stitch this all together, and so I think the services component is really important for this area, as well as having that knowledge of more than just one solution. Yeah, get it Totally.

Speaker 1:

The other trend you're watching and writing is a sort of hybrid work for this area, as well as having that knowledge of more than just one solution. Yeah, I get it Totally. The other trend you're watching and writing is a sort of hybrid work trend which is now the new normal, but varying degrees of adoption. You've got big banks moving 100% back to the office. You've got other organizations fully embracing remote work. How do you think about balancing flexibility and productivity in this new hybrid model?

Speaker 2:

Yeah, even state of California, I think I read yesterday they're saying everybody's got to go back to the office, right, and now the concern is, do they have enough office space, which I think for some organizations may become a challenge that may have not have thought that part through.

Speaker 1:

But again.

Speaker 2:

I think for us this is one of the reasons why I think you know the hybrid strategy for a given organization when they think about their communications is so important, right?

Speaker 2:

And one of the other things that came out of the tech aisle survey that we did is that they said that modernizing their communications and the connectivity between employees was really important. So on the surface you say, okay, that makes sense, well, why wouldn't just a peer as a service sort of address that need? But the reality is they're talking about the entire workforce and, as many of us know, 65 to 75% of the workforce is comprised of frontline or specialized workers, right? So what the survey is really saying is that they want to have sort of a level playing field, an inclusive environment where the entire estate can interact, collaborate, operate as one organization. And that gets complex when you have a mix of remote workers whether they're at home or in a remote office or location and more headquarter style. And so that combination of complexity from a security, resiliency and so forth perspective, I think really plays in the hybrid strategy favor of having that sort of again, right tool for the right job and the professional services available to make it all work together in a seamless way.

Speaker 2:

So for the user, you know, it's sort of simple, but for the enterprise, it checks all the boxes in terms of security, resiliency and ease of managing and maintaining Right, and so that's where we really see those two things kind of converging, as, as this trend around the future of war continues to evolve, yeah, great, great insight.

Speaker 1:

The next question is a little bit of inside baseball, but I guess from a marketing perspective, as CMO, you know how do you lead the team and communicate. You know Mitel's value in such a you know, dynamic and disruptive and changing environment day to day. That must be a little bit of a challenge.

Speaker 2:

I think it's an exciting time right, like there's a lot of things to sort of sink your teeth into. And I think, evan, you and I have known each other long enough that you know I like to. I like to poke the bear a little bit here and there, to be a little bit more provocative, and because I think I think dialogue is an important thing in our industry and it is within a given organization in terms of getting people to really think as opposed to just follow. And so, you know, I really motivate my team to sort of challenge the status quo where are the new, fresh ideas going to come from? And I enjoy having that same type of interaction with our product teams.

Speaker 2:

I was a former product manager, so my dialogue with our head of product you know you've met Martin before we have a great, very constructive relationship where we brainstorm, we challenge one another, whether it's the narrative where we're taking the brand, whether it's some of these angles around product strategy, whether it's how do we really think about the future of work and where that's going, and what the role of some of these specialized and mission-critical workers need, as it relates to those that are in the back office, or the broader sort of set of knowledge workers, and so I think all of those things come together to create kind of an excitement around you know, sort of always constantly challenging yourself to reimagine, and I think that's where the best ideas come from when you do that, and that's motivating for the team and I think it's motivating for the market in terms of how we move the conversation and drive innovation for our industry.

Speaker 1:

Brilliant. So that's really insightful conversations with your CTO, louise, and your head of product, and there's a lot with AI and Gen AI going on. But between that, what other kind of innovations or market developments are you excited about over the course of this year?

Speaker 2:

Well, one of the reasons I came back to the industry, evan, and came specifically to Mitel, was I love that we sit at that intersection of hardware and software and I think you can do some really thoughtful things that benefit customers when you sit at that intersection, and so obviously, we create a lot of world-class devices, but it also, I think, improves our ability in terms of what we put into some of our software products. So that's one of the things that I think is really exciting. We've got a number of things that we've been working on on that vein. On the contact center side, we've got a product that we've had for a while that we haven't probably talked enough about in the market, but we're going to be showing it at Enterprise Connect called Workflow Studio, which is basically a low-code, no-code communications and AI workflow solution that complements whatever platform you're using, whether it's for UC or for contact center for UC or for contact center and it literally is this you know, sort of drag and drop type of experience for figuring out what your workflows should be that support your business, including, you know, certain capabilities around how you're leveraging AI. So I'm pretty excited about showcasing that next week.

Speaker 2:

You know we've got we won't be showing it next week, but we've got a new version of our expert solution, which is a very specialized tool for everything from trading desks to, you know, air traffic control and these mission critical sort of scenarios, which is a purpose built piece of hardware that you know the defense industry uses as well, that is tied into our communications platform.

Speaker 2:

We've got a new version of that that we're bringing out over the next couple of months. You know we've got a new version of that that we're bringing out over the next couple of months. You know we've got some new certifications that are going to help us with the US Department of Defense, with some of our solutions. So we're excited about doing more on that side of things. And then, of course, you know we've got the continued innovation that I'm sure Louise talked a lot about, which we'll be showcasing next week, you know, with our MCX product, with AI, you know, which I think is going to be pretty powerful. But one of the things that I think is going to be really interesting again, we designed it probably predominantly for retail, but I think that there are so many other horizontal use cases for this which is this AI enabled decked headset. Again, we sit at that intersection of hardware and software.

Speaker 2:

So for retail it's really powerful when wifi and mobile isn't that great.

Speaker 2:

You know we're not talking about a push to talk device, we're talking about AI enabled voice control. Uh, very comfortable headset that we're going to be bringing to market, um, and so I obviously it'll be awesome for for retail, but you know, I think that there's so many other powerful uh use retail. But you know, I think that there's so many other powerful use cases in healthcare and in other scenarios where I think that's going to be very valuable. So we're pretty excited about that, you know. And again, as well as what we're doing on the AI front, I think again, at the end of the day, for us it's about really being thoughtful around what we're doing with Zoom, what we're doing with some common UC experience, that kind of address, the core UC requirements for an organization, and we've got some improvements in our UI that we're going to be rolling out next quarter that are already present in the new MCX product. So we'll be bringing that to market, as well as these specialized workforce scenarios, because we really think not just in terms of unified communications or unified communication experiences.

Speaker 2:

We're really really trying to think hard and drive innovation around workforce experiences and I think that that sort of spans the full gamut from, you know, kind of the common you see, all the way to those specialized mission critical scenarios.

Speaker 1:

Wow, that's amazing. Can't wait to see it all in action. Congratulations, Eric, and have a great week at Enterprise Connect.

Speaker 2:

Great Thanks, Evan. Great to be on Thank you.

Speaker 1:

Thanks so much. Thanks everyone for listening and viewing. Take care.