Web conferencing and collaboration service provider WebEx Communications Inc is altering the mix of its spend on sales and marketing vis-a-vis R&D, with the EMEA a region it particularly targets for growth over the next four years.
Bert van der Zwan, the recently appointed VP for EMEA at the Santa Clara, California-based company, said the region for which he is responsible contributes around 12% of total revenue, whereas he said that in a mature company in the IT sector, that figure should be somewhere between 25% and 40%.
To grow EMEA’s share of the overall top line, Van der Zwan’s team will take advantage of the company-wide move to increase its spending on sales and marketing. On our P&L, spending on R&D is currently 14% of revenue, while sales and marketing is 32%-33%, he said. Our intention is to change those figures to 10% and 37%-38% respectively. He said that is not to say R&D spending is necessarily going to drop in absolute terms because the top line itself is growing. It’s just going to be a smaller percentage of a larger number, he said.
In the EMEA region, for which Europe contributes about 90% of revenue, Van der Zwan said WebEx will be adding new staff for its direct marketing efforts, and will also seek to leverage leads generated via webinars, an activity it intends to invest more in this year, as well as keeping itself high up among Google search results. For the Middle East we’ll probably adopt more of a channel play, he said.
In addition, he will be seeking new partners to sell WebEx services, including carriers like BT and Telefonica who are already on board, and companies offering project management services for which WebEx can be a value add.
WebEx is diversifying beyond its traditional core business around web conferencing into other areas of software-as-a-service such as systems management, and this will be integral to its growth strategy. The addressable market for web conferencing and collaboration in EMEA is forecast by IDC to be at around $200m by 2009, whereas SAAS should be $1.2bn-$1.9bn by then in the region, he said.
The company also recently expanded its collaboration offerings with a partnership with AOL, enabling its consumer instant-messaging service to be offered in a secure form into the enterprise market where it will run over WebEx’s proprietary MediaTone network rather than the public internet.
The background to this increased spending on sales and marketing by WebEx is the increasingly competitive market for conferencing and collaboration. By and large, the competition comes from product vendors rather than service providers, with heavyweights such as Microsoft, Cisco, and IBM high on the list of contenders for market share. They tout the flexibility of such an approach, promising with their products the ability for individual corporate employees to set up ad hoc conferences on the fly, rather than having to book pre-arranged slots for meetings and then circulate the URL and passwords to get into a WebEx meeting.
WebEx’s recent alliance with AOL is therefore a natural response to these developments. Forming an alliance with an archrival of Microsoft in the IM market will enable it to offer its AOL Instant Messenger into the enterprise just as Microsoft is doing with MSN Messenger.