“Oh, we got both kinds”, the waitress in the Blues Brothers movie explains to Jake and Elwood. “We got Country AND Western.”

At ECT, we can also offer both: CAPEX and OPEX, depending on what our customers need. CAPEX are capital expenditures, i.e. customers buy the whole platform with the product from us. We install a system, provide maintenance and the operator creates revenue with it. That’s a business model for customers that prefer to make a larger investment, pay for it in one go and then own the system with the value-added service they’re offering. It is the model most customers opt for.

But we wouldn’t be ECT if we were unable to help carriers who are reluctant to pay for an investment instantly and who want to see how business evolves. For these customers we offer OPEX, i.e. operational expenditures. Here, ECT owns the platform, installs it with the client and participates in the client’s revenue. We take part of the entrepreneurial risk and if the service works well, we and the operator benefit.

There are pros and cons for both models. It depends on the carrier’s business case, which approach works better. If you opt for CAPEX, you have invested in new equipment which on your books and has to be depreciated but at the end of the day it’s yours. Plus, it’s up to you to choose the level of service and maintenance that you think is necessary. It’s an additional service that we offer.

With an OPEX business model you won’t have additional equipment on your balance sheet. We charge a set up fee plus a monthly fee and provide maintenance. Critics of OPEX may say, you have to share a portion of the money you earn with the system, but at the end of the day, your investment is not particularly high and you not only share revenue with us but also part of the risk.

So, whatever your business case is, whatever your situation may be, we can offer a business model that meets your demands and is mutually beneficial at the end. We got both kinds; Country and Western.

What happens when you call a service number or any other phone number? As soon as the called party picks up the phone, the call is billed, regardless of whether you talk to a real person or end up in a call queue. However, German lawmakers plan to pass a bill which would mean that queuing has to be free of charge.

So far, this is only planned for Germany, but I can well imagine that regulations for free call queues could also be made in other European countries sooner or later, so carriers and service providers in other countries should also be prepared.

In Germany, the industry is not very happy with this legal endeavor because it is very difficult to accomplish technically. The draft regulation proposes that free queues have to be available for calls from fixed and mobile phones, pre- and post-paid.

For off-line calls this is not so much of a challenge. You take the call data records and deduct the time spent in the queue.

However, pretty much every call that you make is an online call. It can be routed through multiple queues, even outside the public network and each has to be free of charge. I can think of two ways around this issue.

The first is to play a ring back tone or corporate ring back instead of connecting the call to a queue. This tone could tell the caller to stay in the line until the next agent is available. Only when the agent actually takes the call, it is connected and can be billed. The disadvantage: you can only do this for two minutes. After that the call is disconnected.

The second way is the implementation of a network-based waiting queue with off-line billing. This is a solution which ECT offers. If you want to know more, don’t hesitate to get in touch.

What’s special about ECT? We develop and sell value-added services and cooperate with carriers and service providers worldwide. So far, so good. I believe, however, that we could not be internationally successful without our international workforce. Every third ECT employee has a different nationality. We have people from over thirty (!) different nations.

Many small and medium-sized companies struggle when doing business outside of their home market – ECT is an exception to the rule. Our international workforce is a competitive advantage. Our customer base is as international as the ECT team which allows for a valuable knowledge transfer and gives us a better understanding of our diverse markets. This multicultural insight also helps us to enhance our products. Our international workforce and customer base has, for example, brought us to augment our ring back system with a user interface that is almost completely unknown in Europe: USSD.

Having this multicultural team gives our company a unique corporate culture. What many people here have in common is that they work and live far away from home and that they have to struggle with a foreign language and German bureaucracy. We help and support each other getting started in Germany. This moulds our team together.

The common language spoken by all here is English. Information is shared about different cultures, places to visit and things to eat and colleagues share the occasional regional delicacy on special occasions, such as birthdays. New colleagues from abroad are regularly introduced to the many Bavarian specialties.

On a regional level, ECT sponsors local events, such as the subscription concerts by the Munich Chamber Orchestra, which employees can attend with their families. This not only supports the sense of belonging in the company itself, but also increases identification with the local region.

During the crisis last year, the German federal government introduced a series of measures to stimulate the weakening economy. This economic stimulus package became known as “Konjunkturpaket II”. The idea was to help companies hit by the crisis with fresh money out of a substantial fund to bridge the gap until their situation had improved.

In the end, the money from “Konjunkturpaket II” actually has quite high interest rates. Banks are supposed to give credit to companies in need support from this pot of money; they then, at their own discretion, add what has often proven to be a high margin for the risk. Additionally, the tax payer steps in as a guarantee.

It sounds like a pretty good deal for the banks, but apparently this isn’t quite good enough. Many banks are trying to persuade companies that haven’t been hit by the credit crunch to use “Konjunkturpaket II”. They lend expensive money, guaranteed by the tax payer, and try to give it to sound companies at very unfavorable conditions. High margin, zero risk! The whole issue has had an interesting impact on the relationship between banks and their corporate clients.

I was witness to one such persuasion attempt: A local bank invited me and managers from several other companies to a business breakfast. None of the people attending had considered themselves a candidate for “Konjunkturpaket II”. The bankers tried to talk the guests into using “Konjunkturpaket II” although they didn’t really need it and most of them had never even thought they were eligible. The creativity of these people still amazes me; they suggested that companies put the money they use for operations aside in a separate bank account and save it for investments and then finance operations out of the governmental fund.

They even actually tried to intimidate people; I remember one of the guests saying that he could actually see a light at the end of the tunnel with regard to the economic situation “Are you sure it’s not an oncoming train?” was the reply he received.

All this has led me to the conclusion that the “Konjunkturpaket II” missed its goal. My advice to companies is; be careful before you let your bank talk you into something you don’t need or want. Banks aren’t trying to give the subsidy to the companies who are in trouble but instead squeeze money out of healthy companies at a low risk for themselves.

Luckily, we never had to take advantage of this program; in 2009 ECT did exceptionally well.

What have you experienced in the wake of the crisis and how has it affected your relationship with banks? I’m curious to read your comments.

There are a few things that most privately held mid-sized companies in Germany have in common; one is the avoidance of deficit spending wherever possible.

At the end of 2007, I decided to make it a strategic goal to fund operations purely out of our operational cash flow. That’s a very mid-sized company kind of thing to do. At that point, we’d been using our overdraft; however, I always had a bad feeling about spending money I don’t actually have.

So what could I do? I decided to cut costs significantly and outsourced all areas outside of our core business. I decided that each and every project had to be cash flow positive from day one. Additionally, I re-negotiated the payment terms with our suppliers. Now we have forty five days for payment, in many cases even ninety days.

It worked. Right now we avoid debt like the plague. Our company rarely uses our overdraft and we finance ourselves exclusively out of our operative business. We’re a financially healthy company.

When I look at other companies, big and small, we’ve done everything right. Many of them are in debt now and are having a hard time re-financing. They might still get credit but the conditions are lousy. Some are even on the verge of bankruptcy.

Lesson learned: Live within your means. This is a business principle to which ECT adheres religiously. It is the philosophy that is the basis of our success. It also forces us to do sound, good business because customer satisfaction and a portfolio of reliable products and services which are in line with market requirements are the only guarantees for a company’s success.

Apart from that, we’re not dependent on any bank. In times of crisis, banks only want to lend money if they have zero risk and a huge profit, but that’s another story…

We’ve been living with the finance crisis for some time now. When I think of the impact on mid-sized companies like ECT, it seems to me there is indeed a positive side to this crisis: It’s reaffirmed my belief in sound business practices.

That’s what I can say from the perspective of my company and my customers. Before the crisis, the banks threw money at us, offering us overdrafts we didn’t need and encouraging management to “invest in growth.” Financial advisors and venture capitalists told me my (profitable, cash-flow positive) business was stagnating. I should embrace deficit spending which would lead to an increase in sales.  And of course the additional sales would allow us to pay back our debts – later. Even my non-executive directors prodded me to be less “conservative.”

Credit facilities were cheap and there wasn’t even commitment interest, so of course we accepted large credit lines from each of our three banks. After all, we didn’t have to use them.

But if you have so much credit, before you know it, you start to do business differently. Some competitors were offering customers financing, so we started to offer financing. Other competitors allowed customers to pay for a project upon final approval, even if it took several years. Again, we followed suit.

When placing orders with our suppliers, we paid them in advance to get better purchase prices. Actually, this often saved us a considerable amount of money, so it wasn’t such a bad deal.

We encountered carriers who wanted to experiment with new services and asked us to do “preliminary” development. Well, even if we didn’t quite understand how the carrier would ever make money with this service, we invested in the development anyway.

As I said all this happened slowly and soundlessly until one day in 2007, I suddenly realized that we were pushing a sizable overdraft uphill. Remember Sisyphus? That’s how I began to feel. I decided – come what may – we had to live within our means.  In hindsight, I was really lucky that I saw the light back in 2007: we all know how tight money suddenly became in the following two years.

Like anybody on a diet, we had to use iron willpower, but in 2008 we were able to eliminate our debt and despite all our reduced spending, 2009 was one of the most successful years in the history of our company.

What’s changed? What triggered my decision? That’s a story for my next blog entry.

As CTO of ECT I would also like to welcome you to this blog. My executive colleagues and I will take turns in keeping you posted with interesting company and technology news. My first blog is dedicated to voicemail roaming.

The European Parliament passed a bill in 2009 that makes life more convenient for network subscribers but is a hassle for all carriers. As of July 2010 there shall be no more roaming fees for voicemail roaming, i.e. high fees a called party staying abroad has to pay when someone leaves a voicemail message. Carriers probably didn’t know whether to laugh or to cry when they heard about this. I say, at least smile because we at ECT came up with a cost-effective solution that enables every carrier to adhere to the new law.

Right now, during international roaming, the home network contacts the visited network’s MSC, which routes the call back to the called party’s voicemail. This establishes two international connections and the called party staying abroad has to pay a small fortune when somebody just drops a message.

Basically, this leaves carriers with two choices. They can either disable voicemail for roaming entirely, or they can opt for a new solution which makes possible what Brussels demands. With this solution, the call is not sent back and forth between networks. Instead, you have the home network’s MSC handling the logic for call forwarding to the voicemail. The visited network’s MSC is “told” not to contact the voicemail but leave it to the home network. There the connection to the voicemail is treated as usual, causing no additional cost for the called party.

Missing some technical details? Want to know how exactly this solution works? My colleagues and I will be glad to help you and answer your questions.

As the CEO of ECT, I welcome you with great pleasure to the new ECT brand.

If you’ve known us in the past, you’ve surely noticed that something’s changed here. Known as we are for squeezing the most out of every penny, I guess you might be puzzled as to why we would suddenly make a major investment in a new ECT brand when the entire industry is cutting costs by slashing marketing budgets.

Let me assure you we haven’t given up our commitment to cost leadership. But our excellent financial performance last year and the continuing momentum of our business allow us to make targeted and well designed investments in our future.

Right now, our company is in the starting blocks for major developments and I hope you agree that it is the appropriate time to change our communications marketing to reflect this.

In the last twelve years, we’ve been active in several business areas that appeal to different target audiences. If you’re interested in ECT Ring Back, a mobile consumer service, it might be a bit annoying to be confronted with our effECTive® Network-Based Contact Center, which is a fixed, business service. It was hard to present our company and product lines within the context of one website and still maintain a close rapport with everyone.

So to provide more comprehensive information on our company and each product line as well as maintain a direct dialog with audiences that have very different interests, I decided to implement this corporate web site devoted just to our company, the way we do business and the continuing ECT story.

For each of our product lines, you will find independent websites with a slightly varied look and feel and a continuously growing wealth of specialist information. Please have a look at the first two, www.ect-ringback.com and www.effective-contactcenters.com. Three more will follow in the coming months.

With the new websites, we’ve incorporated Web 2.0 features to establish even closer personal contact with all our stakeholders, customers, partners, employees, alumni and our friends from the Munich Chamber Orchestra. The whole idea is to start and maintain a focused exchange of ideas with everyone within our ecosystem, especially our customers and the experts in the various value-added services we enable.

In the corporate blog you’re now reading, our two CTO’s, Hans Huber and Walter Rott, and I will be posting weekly entries and we’re very much looking forward to your comments and questions. At each of our product web sites, you’ll also find a blog kept by the respective ECT product group. You can even follow us on Twitter under http://twitter.com/ecttelecoms.

All we now need for a dialog is your participation. So please start right here and let me know what you think of our new branding and corporate website.