Summary: How is the strategic rationale for BT’s acquisition of Ribbit as their ‘Voice 2.0’ platform working out? We spoke with Crick Waters, Ribbit's co-founder and EVP.
The main deployment of Ribbit in BT Business was all of two weeks old when we spoke to Crick Waters co-founder and EVP, Strategy and Business Development of Ribbit, so it is a little early to be definitive about the question of whether Ribbit has yet proved worth its $105 million cost to BT.
However, in addition to aiming to use Ribbit widely to provide ‘Voice 2.0' applications for corporate customers and SMBs, and starting to use it in its core network, BT is following a key Telco 2.0 principle and using Ribbit applications internally to improve productivity and flexibility.
In this article, Crick says ‘Voice 2.0' applications are critical for operators to remain relevant as providers of real-time communications in a multi-screen, multi-device environment, and argues that Ribbit's core skills are "engagement, metrics, and monetisation". We also highlight the learning that the benefits of business model innovation are not always just improved revenue growth, and in many cases include broader benefits to the overall business ecosystem.
We've been following Ribbit and their efforts to create a platform for rapid development of voice & messaging applications for two-and-a-half years. The reasons why we were interested are articulated in this quote:
Further in the future, though, highly reconfigurable telephony is likely to lead to radically different product and business models for telcos. For example, civil engineers stamp out custom bridges off well-tested models based on span, load, and topography. Your telco consulting services arm will be building custom communications experiences, with the software equivalent of a flexible manufacturing system. Custom back-ends, process flows and user interfaces will be generated from tools and models. Each is created appropriate to the application and user context. Most devices will have a completely "soft" and re-configurable user interface.
When BT acquired Ribbit in the summer of 2008, Thomas Howe pointed out in a guest post that CEBP (Communications Enabled Business Processes) projects typically result in productivity gains of around 20%, and 20% uplift in productivity across the whole economy is a lot of money by anyone's standards. We had a look at some different CEBP/Voice 2.0 business models in this analysts' note, and discussed the technology strategy aspects here.
Many people felt BT had hugely overpaid for the company in laying out $105 million for "100 developers working on salesforce.com", as one Oracle executive described it. As we pointed out here, though, it had within it the potential for a transformation of BT's business - a strategy that would integrate developer APIs, open CRM systems, call centres, and broadband connectivity, across BT Retail, Wholesale, and Global Services.
That was the theory, but BT's politics and economics didn't quite work out like that. Ben Verwaayen's departure from BT seemed, at least temporarily, to rob the initiative of top level support. The recession revealed the downside of BT Global Services' (BT GS) rapid expansion, as the division turned out to be sitting on an impressive pile of bad contracts. The doomed NHS National Programme IT contracts were almost enough to add up to a major crisis in themselves, and the plummeting stock market caused BT's pension fund to need a huge cash injection. BT shed some 35,000 jobs, and J. P. Rangaswami was transferred from BT Centre to take over Ribbit personally.
Despite all the drama at the corporate level, though, Ribbit has been quietly achieving. The launch of Ribbit Mobile, its first consumer (well, prosumer) product, got a lot of attention and favourable comparisons to Google Voice, like this CNET review, or this story on TechCrunch:
"Ribbit Mobile's iPhone app is fine as far as it goes, but I kind of just want it to take over the entire phone function of the iPhone, which is the part of my iPhone I use the least anyway."
Let's repeat that: "I kind of just want it to take over the entire phone function of the iPhone...which is the part of my iPhone I use the least anyway". One sentence sums up the potential of better voice and messaging, and the threat to the 66% of Vodafone's revenues that consist of voice or SMS. Here's an example: Caller ID 2.0, a feature for Ribbit Mobile that links your phone number, your address book, and LinkedIn's API:
"Today, when a call comes in or when you make a call, Ribbit Mobile reaches into the social web and finds the recent LinkedIn updates, Facebook updates, Tweets, and Flickr photos of the person calling you. If more than one match is found, Ribbit Mobile will ask you to select the right person."
Figure 1 - Ribbit Mobile Screenshot
Text and Image Source: http://blog.linkedin.com/2010/01/12/linkedin-ribbit/
Ribbit's recent developer challenge shows some fascinating examples of the creativity open telephony enables - Sena Gbeckor-Kove integrated the open-source CRM system Sugar, the winner integrated telephony into an Augmented Reality application.
That's all very well, but it's admittedly a little shiny and tech-newsy. That said, it's absolutely essential for a business like Ribbit that it gets attention - a developer platform without developers is fairly pointless, and Ribbit has so far signed up 22,000 developer accounts. The previous time we checked in (about a year ago) the count stood at 600.
What about the strategy? Is BT still aiming to fix Global Services with open-source software and developer APIs, as J. P. Rangaswami said when Telco 2.0 visited BT's open-source development shop? We had a chat with Crick Waters, co-founder and EVP, Strategy and Business Development of Ribbit to find out. Here are some of the key points.
[NB. As background on BT's organisation, BT Global Services deals in key accounts and giant contracts - multinationals, global carrier services operations, and government contracts. By contrast, BT's small and medium-sized business products sit within BT Retail, in a division called BT Business, parallel to the traditional residential operation in Consumer.]
It is useful to understand Ribbit in the context of BT's strategic objectives. At their 2010 investor day, BT executives said that the key strategic priorities at BT were as follows:
The last two of these are very much what Ribbit is aimed at - BT wants to defend its market share by introducing advanced features that rival operators don't have, and to replace declining voice margins and volume by up-selling its existing small business voice and IP customers to richer networked-IT/cloud computing services. Ribbit is crucial to this strategy as its fundamentally network-resident nature means that BT can deliver better voice and messaging services to any business that takes its service. (NB. To illustrate the importance of bolstering voice revenues, Amdocs forecast an average 3% annual decline in voice revenues globally at their June 2010 InTouch event,)
BT Global Services is already making heavy use of the platform to build applications for its clients, which allows Ribbit to leverage the BT sales force and customer base, while the BT GS consultants and developers get another powerful tool to work in parallel with Salesforce.com, Sugar CRM, Avaya, Microsoft OCS, Asterisk, and friends. The very simplest demonstration of this is on the main BT website for business customers in the UK - ask them for Salesforce.com and they'll offer you the Ribbit plug-in and Ribbit Mobile.
Providing CEBP for businesses ranging from sole traders to FTSE250 enterprises (BT's definition of SMBs) is a significant operational challenge. There are obvious costs to delivering on-premises or even traditionally hosted Asterisk or similar products to hundreds of thousands of SMBs. If BT can provide a platform with comparable features as a cloud service, it can provision Ribbit accounts in the same way as it currently provisions telephony, ISP, or wholesale carrier-services products. This avoids the need to build a huge network of systems administrators and minimises the additional truck-rolls required. They may even be able to use their existing online provisioning workflow and CRM systems.
Rather as Telenor Objects does for Machine-to-Machine applications, Ribbit is a platform that provides horizontal CEBP and unified communications for Person-to-Organisation applications and delivers them from the cloud. As this slide from Marie Austenaa, Telenor's VP in charge of Objects, shows, Telenor is trying to integrate an open platform business model and technology architecture with the traditional telco strengths of managed service delivery, distribution channels, and universally recognised brands.
Figure 2 - Telenor Objects Provides a Horizontal M2M Platform
Last but not least, BT also uses Ribbit in its own internal voicemail systems to transcribe voicemails into emails and forward them to their intended recipients, speeding the process of message delivery and thereby ‘eating its own Ribbit food'.
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