Jola Cloud Solutions' Blog

In the channel, we are seeing an exponential rise in demand for mobile data SIMs, not only for use in 5G/4G routers, pre-Ethernet connectivity and Ethernet back-up but also for digital signage, gaming machines, vending machines, monitoring devices, sensors and ATMs. SIMs are being used in wind and solar farms, measuring and tracking key variables, they are also being used in smart TV cameras, which roam internationally. Manufacturers and service companies are finding new uses for mobile data daily and, as we accelerate towards 5G, this is unlikely to slow down.

It's practically impossible for resellers to provision and control SIM estates without a comprehensive, well-established real-time portal. Choosing a trusted channel-only supplier means the reseller can take advantage of their knowledge and experience when they are bidding for deals. Jola’s most successful partners involve our Partner Managers directly with their customers without fear of disintermediation. Price is really important and mobile data suppliers need to understand that their products have to be priced so that channel partners can win deals at decent margins.

Millions of PSTN lines won’t be able to use a SoGEA or FTTP type replacement due to costs, incompatibility or logistical challenges. Mobile data will be a requirement for customers replacing PSTN lines for intruder alarm monitoring, call points and many other applications.

When the networks made 4G available to the channel around 2016, it changed the game. 3G SIMs running at only a few Mb/s struggled with email but 4G started to be used as a substitute for fixed-line broadband. When, due to political pressure, MNOs swapped out manufacturers recently, they upgraded many towers to support 4G+ which offers download speeds of up to 300 Mb/s. Although the networks do not publish 4G+ coverage it is estimated that over 90% of the UK population has access to 4G+. As 5G becomes ubiquitous it will overtake the number of fixed-line data connections very quickly.

The opportunity for the channel is significant and for those resellers not sure where to start, Jola has productised its unique process of helping customers successfully sell mobile data. It is called The Mobile-Data Revenue Generator (The MRG) and it helps partners to identify low-hanging fruit and win their first significant mobile data opportunity. From there they can start to productise mobile data and develop the eco-system required to sell, support and bill it.

What are the benefits to businesses of a strong female presence in boardrooms?

According to Deloitte, gender diversity in UK board rooms is lagging behind European counterparts with only 1 in 5 board room seats held by women. I sat on the board at Jola for over eight years and was the only female board member. Being a female on the board sends a positive message to other females in the organisation that there is not a glass ceiling and it is possible to progress to more senior positions within the organisation. If you can see someone similar to yourself doing the job you want in the future, it makes the goal seem more achievable and you can often gain a mentor to help you learn the skills to be able to get there. I like to think that I brought a new dimension to the team and some complementary skills. Board discussions were always inclusive and a female marketing perspective from a detail-orientated person was often useful in decision-making. The Jola Board has learned that it’s not enough to have female representation you have to make sure decisions are not made without everyone’s input.

How are you taking a lead on the issue of increasing female representation at the top in your business?

At Jola, we focus on hiring and developing the skills we need to satisfy the demands of our partners. We use our own technologies in-house to facilitate flexible working and run training and development programmes, which has helped us to recruit more women into management positions within the organisation.

I have championed a few different initiatives to remove the barriers some women face working in the channel such as work-from-anywhere and part-time hours. This has facilitated Mums working from home, doing school drop-off and pick-ups, attending parents' evenings, school productions, sports days and taking kids to after-school clubs. It has also allowed Mums to be at home to look after ill children and relatives globally, whilst being completely focussed on the needs of Jola, our sales team and our partners’ requirements during working hours.

We have introduced fantastic EMI schemes and employee benefits to compete with much larger organisations offering the same flexible working and gender-diverse culture locally.

We changed the way we recruited to remove the barriers of very specific qualifications and experience and focussed on finding smart people who share the same values as the Jola team and who are looking to grow and develop with us.

We are supported by entrepreneurs who have given us a voice at every level of the organisation and a career path to progress. We introduced work experience schemes, apprenticeship schemes, sandwich year placement schemes, graduate training schemes, and we advertised roles internally so women could progress inter-departmentally. We encourage and pay for our staff to gain qualifications to progress within Jola.

We have official training and development programmes as well as unofficial mentoring programmes. We encourage networking and personal development sessions with organisations such as Reframe, Women in Tech.

What initiatives and developments do you participate in to help increase the presence of women on boards in the wider industry?

I actively contribute to industry magazines and attend events speaking on panels discussing diversity and inclusion.

What are the objectives of these efforts and how are the initiatives being progressed? 

My objective is to raise awareness, inspire and to demonstrate how small changes can make such a big difference to the quality of female candidates being recruited and the success of organisations in the channel.

What more action needs to be taken to boost the number of women on boards?

I don’t think there is a quick fix. We need to increase the number of experienced candidates to recruit from. The more we can influence young people to reach their potential, the better the recruitment pool will be for us when they are ready to start work. We could go into schools and talk about the careers we can offer in IT and Telecoms and get them excited about learning new skills. We can offer work experience programmes, apprenticeship schemes, mentoring schemes, re-training schemes, back-to-work schemes and graduate schemes to grow our own talent internally and offer career development and share schemes. If you are on the board you often own a stake in the company and to do this you need to be able to invest. This is a barrier in itself. I was lucky enough to be part of a start-up with seed money, of which my share was a percentage I was able to invest.

What barriers have you identified to having more women on boards and how is Jola addressing these challenges?

To recruit the best talent into the industry we need to look at barriers. Do our daughters want to become board members in IT and Telecoms? My daughter did want to be a YouTuber or an actress but has recently said she may start her own business and aims to be CEO. She is more aware of what we do as she spent so much time sharing my home office being home-schooled.

Jola addresses some of these challenges because we need to grow our own talent internally. We are not specifically focused on hiring more women, in fact, we are against positive discrimination. If board positions are recruited for, the pool we recruit from needs to be more diverse and to do this we need more experienced women with great track records in previous board positions, who can add something extra to the existing board.

What cultural considerations need to be taken into account and why?

If you have children, someone needs to look after them. If I look at the school gates 97% of the parents doing the pickup and drop-offs are women. If you don’t have children it may be more of a level playing field. Do we then need to look at job descriptions for potential board members to see what they are looking for and work backwards? Do we have the connections and network to be recommended for openings? Do we have the track record and experience required? If not, we need to build that and work with brilliant entrepreneurs who can help us achieve our goals.

There are millions of individual PSTN lines in the UK that are soon to be end-of-life. Upgrading to broadband is an expensive overkill solution and can come with significant upfront costs.

Jola has solved this problem for resellers and their customers by creating zero-CapEx mobile data rental packages for single PSTN lines serving phone calls, alarms, EPOS machines, door entry systems, CCTV, faxes, lift lines and calling kiosks, among many others.

We have a wide range of DaaS (Device-as-a-Service) bundles which include the router, the SIM card, the SIP Trunk, porting, ATA and airtime. There are no upfront costs and in-term devices can be upgraded, with faulty equipment getting an advanced replacement as standard.

Resellers can replace common PSTN solutions at a really competitive price, managing operations and usage within Mobile Manager. End-users can retain their existing numbers and choose their preferred SIP Overlay solution with additional options such as voicemail and call recording.

Clear strategy

Jola was set up in 2014 with an SEIS investment, owned and managed by the team that built and sold Griffin Internet. The business was established as a channel focussed telephony provider. Jola has a strong focus on process automation as a key aspect of customer experience and this has enabled revenue growth with modest overhead increases. Early successes with M2M, and a clearly identified opportunity in a growing market, led to an early pivot to mobile data connectivity. Other key components of strategy are focus on intellectual property in the service offering, recurring revenue, a broad customer base, and customer retention. Clear articulation and delivery of our strategy was a key component of our Information Memorandum (IM) when we launched our investment process.

Key Performance Indicators

Jola is highly focused on KPIs and monitors them rigorously at both company level and for each staff member.  This is how we align company strategic objectives with those of our staff. Performance against these targets is a key determinant of staff progression and reward.

Establish a reputation

The Jola team, made themselves known to the investor market from the outset. This included building relationships with private equity, focussing on investors who understood the TMT market and, more importantly, wouldn’t baulk at high valuation multiples. We used trade publications, awards submissions and attended events where we might bump into investors and acquirers. That was how we first met BGF. We also built a relationship with analysts Megabuyte as a means of creating awareness of our strategy and financial performance.  Our golden rule was that we would only share revenue and EBITDA projections that we could achieve with certainty.

Financial planning

Jola operates a 3-year rolling financial plan. Our budget is the first twelve months of the plan, fixed at the start of each financial year, and the remaining 24 months provide a longer-term outlook. Having this 12+24 as an ingrained discipline made it easier to prepare the IM and is welcomed by investors. Setting achievable targets was fundamental as we knew that investors would look at the record of achieving budget. Our budget is shared with all staff, and we update them at monthly team meetings. We re-forecast quarterly for cash flow purposes and to measure if we are on track to achieve budget. The cash flow forecasting was especially important in the early Jola days. An advantage from having a realistic three-year plan meant that we could quickly assess the value of potential earn-outs offered by investors.

Transaction ready

From Day 1, Jola was set up to be ready for external investment with a particular focus on being paperless in every part of the business. We keep soft copies of our Intellectual Property, our key business processes, and our legal agreements. We used lawyers to review our customer contracts and service agreements before they went live. If we must deviate from our standard customer terms, we attach an addendum that clearly sets out the non-standard terms. We started our data room the day that the company was incorporated and used it to store our key documents.  We knew that an investor’s lawyer would review our legal documents thoroughly and that being transaction ready would make it easier for the management team to survive the due diligence process and have lower costs.

Understand your numbers

Financial due diligence is the most rigorous part of the investment process, and we knew that preparation is key. This involved producing a full management accounts pack every month, including income statement, balance sheet and cash flow, with analysis of performance and trends, including versus budget. This was supplemented by various KPI packs with both financial and non-financial measures that were discussed at a monthly board meeting, chaired by an experienced non-executive chairman. After the first couple of years, we elected to have audited accounts because we knew they would provide comfort to investors and ensure we were compliant with accounting rules. All of the above meant that we were match fit when financial due diligence reviewed our financial statements (current year, two prior periods and our budget and projections) and KPIs.

Why did we choose BGF?

During 2020 the shareholders decided to de-risk their personal financial investment by selling a minority stake in the business. We produced an Information Memorandum and ran a beauty parade with a handful of investors. We did not speak to investors that required a majority stake with control, as we wanted to keep control of Jola to take the business forward to a full exit. Although the business was ready for full scale due diligence, we were attracted by BGF’s lighter touch approach and that we could complete a quicker transaction with less distraction. We considered raising bank debt rather as an alternative to selling equity but, for tax reasons specific to our SEIS investment, this route wasn’t open to us. 

Finding the right investor isn’t always about the highest headline price. We took references on all potential investors with particular focus on those that could transact quickly, had access to funding and were unlikely to price chip as we neared completion. It is easy to focus on a headline offer but it is not the actual cash amount that the shareholders will receive. There are many additions and deductions to arrive at the final value and having the right advice in this area is essential.

Advice and managing the transaction

I joined the Jola team as part time CFO, mainly to prepare the business for external investment and manage the transaction, including writing the IM and setting up the formal data room. Every deal is different, and having in-house experience meant that we didn’t engage a third-party corporate finance advisor. To avoid unnecessary distraction for the rest of the team and to let them to focus on their day-to-day roles, Andrew (CEO) and I took on the bulk of the workload. This allowed us to over-achieve on our projections and avoid any difficult discussions with our investors.

Working with trusted legal advisors is critical, and price isn’t paramount. Based on previous experience, I introduced Jola to the team at Pinsent Masons, who helped us negotiate the legal and tax aspects of both transactions. From experience, I avoid working with advisors who need to prove they are the smartest guy in the room. However, we did run a competitive process to ensure they kept their pencils sharp.

Sale 

All the above meant that we were in good shape when we were approached by Wireless Logic. The due diligence was certainly deeper and more onerous, but we were well-prepared and were able to complete a relatively speedy transaction. Wireless Logic referenced very positively, and this was a key factor in our decision to start an exit process within twelve months of the BGF investment. It was pleasing to provide BGF with a strong return in a very short timeframe.

And finally

It has been an eventful and thoroughly enjoyable couple of years working with the Jola founders. The shareholders have had a great outcome and the business has found a great home.

Ronnie Smith, Jola CFO

All 4 major UK networks are well underway with their 5G rollouts. Three and EE are ahead in terms of numbers of cities compared with Vodafone and O2, however the reality is that most major cities now have 5G which accounts for over 50% of the population. The expectation being set by the operators is that it will take a further 5 years to reach 90% of the population. Achieving this will involve turning off the 3G networks to re-use that spectrum to support 5G.  The last 10% may well require technology or an approach that has not thus far been used in UK mobile networks such as using 5G satellite constellations to provide infill.

Opportunities for the channel

5G has opened many opportunities for the channel. The performance offered by 5G can be better than the performance offered by the fixed line broadband service available in many locations.  The channel are bound to have customers with poor broadband performance and 5G could well be the answer, especially when combined with a high performance 5G router and external antenna.

5G provides high performance Internet access in locations where there is no fixed line connectivity at all.  This means locations where solutions such as hosted voice, collaboration, IP CCTV could never have been supplied are now accessible for the first time.

5G requires new devices to take full advantage of the increased performance.  A fact often overlooked is that all the UK networks support LTE-Advanced or 4G+ with a much larger footprint than their 5G networks and yet the vast majority of 4G routers on the market today don’t take advantage of the extra performance.  In some cases a good quality LTE-Advanced or 5G router would provide up to 4 times the performance on 4G compared to using a device that doesn’t support LTE-Advanced.  In many cases where you’re deploying 4G in a fixed location we would recommend installing a 5G router because it will provide much better 4G performance and will be ready for 5G when the coverage reaches that location.

Jola launched our Device as a Service offering to solve a problem that has been caused by 5G. Good quality, high performance 5G devices are expensive, potentially three or four times the price of the equivalent 4G device. Our channel told us that this was an obstacle to 5G adoption. So now we offer all our devices on an OpEX model so that then channel partner and the customer don’t have any hefty upfront costs that might put them off taking advantage of 5G.

2G/3G Sunsetting

The 5G rollout is leading to the 3G networks being switched off over the next 3 years. This is a huge opportunity because there are millions of devices that are 3G only and don’t support 4G. This means that when the 3G network is switched off suddenly payment terminals, tablets, kiosks, digital signage displays and many more devices will just stop working! 

This means that you have the opportunity to generate revenue from the hardware swap-out but also this is a great time to speak to your customers about swapping out your customers mobile data SIMs.  Many organisation did deals years ago with MNOs (particularly the M2M / IoT divisions of the MNOs) that the channel could replace via an aggregator like Jola, saving your customers significant money and making a healthy margin at the same time.

5G in the future 

Today 5G is being delivered using the same frequencies as 4G and typically delivers average speeds of around 150Mb/s and over 500Mb/s in perfect conditions. However, to unlock the true potential of 5G and deliver multi gigabit ultra-low latency performance then the operators need to start using the spectrum in the millimetre-wave (26Ghz – 40Ghz) bands and this will require regulatory change and significantly higher investment.  When this happens I think 5G can really deliver on the promise of any application anywhere and it’s not inconceivable that fixed line access is no-longer essential for many businesses and use-cases.

Addresses PSTN replacement need

There are millions of single-call PSTN lines in the UK that are soon to be end-of-life. Upgrading to broadband is expensive and capital costs of converters and 4G routers soon mount up.

Jola has solved this problem for resellers and their customers by providing everything they need, on one affordable monthly rental.

“We have recently added a wide range of Analogue Telephone Adapters to our PSTN Replacement Toolkit ranging from single to 48 port solutions. We also have routers with in-built ATAs as a ‘one box’ solution for those customers that only need a single line. Jola Partners manage each port on their ATAs using our portal. The credentials of their SIP overlay services are auto-configured on the devices. End-users can retain their existing analogue phones and port their numbers, which is great for customers such as hotels and care homes, who don’t want to replace their handsets. Jola ATAs complement our existing portfolio with customers able to plug the ATA into an intelligent 4G router and use Jola mobile connectivity to deliver the SIP service. The Device as a Service model is becoming increasingly popular because there are no up-front costs and the device is guaranteed for the duration of the contract” Lee Broxson, CSO, Jola.

Following the acquisition by Wireless Logic, Jola is strengthening its Channel presence with the appointment of Jon Chard as Partner Director.  Jon brings a wealth of Channel knowledge and is a fantastic asset to the Jola Sales Team. 

'‘I’m delighted to have joined the Jola Team, a business that I have held in high regard for several years. Jola is an innovative and forward-thinking business in the channel, and I am looking forward to helping them push towards further growth and continued success.’ Jon commented.

Lee Broxson, Jola CSO added, ‘It’s a pleasure to have Jon joining the team as a Partner Director, he brings with him 17 years of telecoms experience with five of those spent working with Jola at one of our suppliers.  Jon will be managing our larger MSP and ISP partners with a strategic goal to help find and win larger deals within their bases using our unique Mobile-Data Revenue Generator™  (MRG™) process.’

Chard’s appointment enhances the continued expansion of Jola with Oliver Izard, a former sandwich year placement, re-joining Jola as an Internal Account Executive.

Jola was setup such that we would be ready to transact at any time. We didn’t know the exact date and we didn’t want management distracted from growing the business. So;

1. We operate a 3-year rolling financial plan, re-forecast quarterly for cash flow purposes. The first 12-months is the budget, which is fixed in April, followed by a 24-month outlook. There is a new draft 12+24 every January, finally signed off in March to start in April. In my experience operating only a 12-month budget and writing a business plan just when you need an IM is a mistake. We re-define and hone our strategy every year but this tends to be more about emphasis than direction. Our fundamental strategy has not changed since 2016 when we pivoted the company into mobile data. Our overall approach makes the production of an Information Memorandum much more straightforward.
2. We are paperless. This is really important for Due Diligence. All our IP is documented, and we had all our contracts and service agreements completed and checked by lawyers in the first year. We resist non-standard agreements, even down to insisting on our own NDA. If we have to amend our terms it is recorded and done via an addendum, A buyer’s lawyer is going to have to read everything in DD and very often the seller pays for this, so by minimising exceptions we cut out a lot of time and cost. We opened our data room the day we started Jola with £50k in 2014.
3. We made ourselves known to the market and started building relationships with PE very early. We focussed on specialist TMT Private Equity because they ‘get’ technology, won’t wince at the multiples and will help with origination of deal flow for a buy-and-build strategy. We talked to credible analysts like Megabuyte and were very open with them about our numbers and strategy. Some PE firms won’t do minority investments and some won’t do secondary-only so I found it saved time to be upfront about our intentions when approached by PE firms. Receiving offers from PE and growth funds is very affirming for both the strength/depth of management and the general and financial health and strategy of the business. However if you are immature in these respects but still want to raise money you could consider a syndicate (sometimes called deal-by-deal) arrangement. This only really works for a minority stake and you will still need an IM, but the due diligence, process is much lighter and shorter.
4. They say good advice is cheap but there is some very expensive bad advice out there too. For TMT Corporate Finance advice and deal assistance there are only a few in the UK I would recommend. My last deal was 2012 so to bring myself up to date I asked people I trust and respect about their recent experiences. This was invaluable. Above all we made sure we had the best CFO we could afford. We only needed someone part time when we weren’t transacting and we found the best CFOs were often plural anyway. Supported by Pinsent Masons, our CFO and I did all the heavy lifting on all deals, shielding the management team as best we could. We short-listed corporate lawyers for their track record and it was a bonus if they had worked for some of the buyers on our shortlist and knew their redlines and ‘gives’ on the SPA. Three legal firms bid for the work.
5. Most processes take around six months and we knew it was important not to lose focus and miss our numbers in that period. We didn’t want to make our investor nervous or give them a reason to try and chip us on the agreed price.
   

Vendor partnerships are much more effective than simple supplier-customer relationships, especially when considering new products or new markets. If your vendor is ‘sell-through’ rather than ‘sell-to’ they will have a lot of experience of what works in different verticals and they will be able to talk in detail to their case studies. Probably more importantly they will know the pitfalls to avoid, and they can help your conversion by steering you away from bids you are unlikely to win.

Of course this only works if you trust them, which means they have to be channel-only and be able to point to a track record of selling exclusively through resellers. Some of your bigger customers will be tempted to try and go direct once they learn the identity of your vendor-partner. You must feel confident that they will not only close this conversation down but do it in a positive way that does not jeopardise the deal or your overall relationship with your customer. 

Jola’s experience of the mobile data market is that most end user customers have an application for IoT/M2M. They either don’t realise it or they don’t consider the MSP/Reseller able to fulfil their needs in this area. Against this they would much rather buy from existing suppliers, particularly where they need help in defining the project and possible solutions. 

Jola has productised the process of engaging with customers on mobile data and called it the Mobile-data Revenue Generator (MRG). This unique process defines the way we work together and qualifies opportunities, capabilities and skills. We help our partners to fill gaps in their capabilities and ultimately win large, high margin, long-term contracts.

We have been selling mobile data to the channel since 2014 and we understand the pain points of our partners and the needs of their end-users in each vertical market. Over time we have developed a unique portal, that gives you the control and visibility you need to manage global SIM estates. Control you can even extend to your customers. We have also developed unique hardware solutions that save our partners time, helping them create a great customer experience, maximise their margin and minimise costs for their customers.

It is very common for the channel to use APIs for both availability checking and for provisioning tasks such as setting up new services.  With fixed line broadband and leased line services then availability checking is usually a key first step for a reseller to collect a lead.  So, they may have a postcode checker box on their website that collects some information about the customer’s location before using an API to provide a list of services that are available all without any human intervention required on the part of the reseller.

I don’t think it’s an accident that Jola’s largest resellers transact almost exclusively using APIs.  Whilst we have arguably the most feature rich mobile connectivity management portal in the form of Mobile Manager, for many resellers they want to pull all that functionality into their own portals.  We decided right in the beginning that anything we develop into our portals should also be available via an API and that strategy has paid off.  Resellers can now perform the full lifecycle management of a mobile SIM card via an API including the initial provisioning, the in-life management and usage monitoring through to changing the tariff on a SIM card or even cancelling it at the end of it’s useful life.

If a reseller makes the move to using APIs then I think it’s important to think about consistency.  So decide which workflows you’re going to automate via APIs and ideally always use that workflow rather than sometimes using the API and sometimes using a GUI.  The reason is that it’s likely that your API workflow will be keeping data in sync between your internal systems and your suppliers’ systems.  So, if you don’t use that workflow consistently you can end up with a situation where your internal systems are out of sync that can lead to billing issues or confusion when it comes to providing support for that service.

I think API usage will be become even more widespread.  The massive adoption of the hyperscale clouds such as Amazon Web Services and Microsoft Azure is providing really powerful, easy to use and well documented API gateways that simplify the process of interacting with all kinds of different APIs.

Open APIs are in their infancy and I don’t think there’s a great example of their adoption within the channel today.  However the promise is clearly exciting and potentially could lead to the channel add a new layer of stickiness to some otherwise commoditised services.  For example, your mobile phone SIM card could have a set of open APIs that gave access to things like SMS history, call logs, data usage information.  Then an App developer could use those APIs to provide really in depth management capabilities into an easy to use App available from the App store.  Now, if your SIM supported those Open APIs but your competitor didn’t and your user valued the capabilities delivered by that third-party App then it’s unlikely they’d switch SIM provider to somebody that doesn’t have that capability.