A Quick Look at the State of UC as a Service
A Quick Look at the State of UC as a Service by Joseph Williams
The UCStrategies experts, including me, will be doing a podcast on UC as a Service (UCaaS) this month and you should tune in to get everyone’s perspective on this topic. But UCaaS is a business near and dear to my heart since my time since I was the Microsoft channel partner manager for Lync as a UCaaS solution, and I wanted to share some specific thoughts on what I think the state of UCaaS is today.
First off, I entirely agree with Vimal Thomas, vice president of Yamaha America, and his observation that “cloud computing is going to change everything whether you like it or not” (Business Insider, July 4 2015). It is hard to imagine that anyone will want to manage their own on-premise equipment long-term if capable and economical cloud solutions are available. In effect, this means that natural market momentum should favor UCaaS offerings, assuming product maturity and reasonable costs.
UCaaS product offerings have indeed matured greatly. Whether selling Cisco, Lync, or their home-grown services, UCaaS vendors pretty much all now offer integrated solutions for voice, video, conferencing, collaboration, IM/Presence, and mobility. A number also include fairly robust call center options, and some are delivering sophisticated business process integration. While not all UCaaS offerings are seamless or easy to provision or manage, the same can also be said for on-premise solutions that require integration.
Although UCaaS vendors do not generally publicize their performance statistics, the general sense one gets from talking to industry leaders and customers is that UCaaS performance and reliability are generally equivalent to what enterprises are getting from their on-premise UC solutions. While the technology is maturing, the management reporting and support models are still nascent.
One constant complaint is that UCaaS vendors do not provide sufficient insight into performance metrics that CIOs want to track; in other words, when building a performance dashboard (KPIs), the UCaaS vendors are not transparent or flexible enough for some decision-makers. Another area of concern is around support and troubleshooting. UC is a 7x24 required service. If something goes wrong, the CIO is taking heat and looking for answers. A lot of cloud vendors (not just UCaaS vendors) are not providing sufficient accountability for outages or service performance, leaving the CIO exposed and unable to provide her own accountability to her boss.
As to costs, the evidence so far does not suggest that UCaaS will always result in significant hard cost savings, nor does UCaaS suffer from a cost disadvantage. There are the economics of capital versus operational costs that favor UCaaS when an enterprise is adverse to capital outlays, but my experience is that just as many companies have an aversion to operational costs. However, UCaaS does lead to off-loading of operational workload, and managing a service provider typically requires an entirely different skill-set than running your own UC environment. Over time, UCaaS solutions do allow the IT department to focus on tasks that are more strategic to the business, which should result in positive soft outcomes.
So my sense is that this should be a good time for UCaaS. That said, looking at proprietary reports that I cannot quote here, it looks like the UCaaS market is about 50% of what we were forecasting back in 2010. What happened?
This is a great question that I hope our UCStrategies experts will have time to address in the podcast. My $0.02 answer is that we underestimated the complexity of the sales cycle. A lot of companies have a limited ability to take on new projects, and where their existing voice or UC infrastructure is working they are not prioritizing UC or UCaaS projects. Even where UC is a priority, there is a sales motion for selling the UC product, then a second sales cycle to host that product as a service. In other words, we sell them first on Lync, then we sell them on Lync as a service. Indeed, vendor and/or provider compensation plans more often than not pay a premium for on-premise sales rather than UCaaS solutions, particularly amongst the telco UCaaS providers.
I believe that UCaaS will ultimately prevail as the primary modality for delivering unified communications services. It is just turning out to be more of a slog than many of us thought.