Cloud for UC: Blessing and Curse
Cloud for UC: Blessing and Curse by Marty Parker
Cloud is the hot topic, for sure. Only a small percentage of the enterprises (organizations above 1,000 employees) are using UC as a Service (UCaaS) in the cloud from a UCaaS service provider, but everybody is talking about it. The recently released Gartner Magic Quadrant for UCaaS 2014 (copies available from several companies such as Thinking Phone Networks) includes 21 UCaaS service providers; Gartner notes there are about 100 UCaaS service providers currently operating in various regions around the world.
While there is much buzz and many providers, the Gartner report has important cautions for every one of the included companies, including such cautions as customer service immaturity or inconsistency, product offering limitations either in the completeness of enterprise voice functionality or the completeness of the non-voice UC functionality, and the ability of the UCaaS service provider to create a sustainable brand marketing and customer acquisition program.
In this context, here are some thoughts about the pros and cons of UCaaS; the blessings and curses comments are at the end of this post.
Pros:
- Ease of Entry. It is easy to get started with UCaaS, especially with those providers who offer multi-tenant services. In many cases it is possible to start a 30-day trial for standard functionality in a matter of minutes or hours. After the trial period, most multi-tenant providers will offer monthly and annual payment plans. However, the dedicated instance versions of UCaaS, in which a separate virtualized copy or ‘instance’ of the UC software is provided for each customer, do not offer this ease since those service providers usually require multi-year contractual arrangements to cover the providers’ costs and risks.
- Innovation Flexibility. Since at least multi-tenant UCaaS is so easy to consume, it is often ideal for testing the new capabilities of Unified Communications and Collaboration. For example, Gartner notes that many companies are using UCaaS as the communications platform for their field workers in a ‘mobile-only’ deployment option in which the employee uses only a smartphone, tablet and/or laptop, with no desk phone (and perhaps no desk). UCaaS also makes it much easier to integrate UC functions with business applications, if the service provider supports the necessary integrations, links or APIs.
- Built-in UC. In most cases UCaaS users will have a broad set of UC tools at their fingertips because the UCaaS service providers automatically include and support those tools. Many on-premises IP-PBX installations may be licensed for UC, but the telecom and IT team choose not to deploy or support the UC features. Thus, UCaaS will likely accelerate user adoption of UC features such as instant messaging (IM), presence, federation, email integration (not just UM), conferencing, and synchronized mobile device support.
- Service Modularity. Many of the enterprise-class UCaaS service providers, especially Microsoft and Google and the UCaaS service providers who support those platforms, offer modular selections of their UC functions that enable an enterprise to move selected portions of their workloads to the cloud. For example, both Google Apps and Microsoft Office 365 have achieved broad adoption as the email, IM, presence and conferencing platforms for large universities, at very low, even free, price points, even though other UC components such as voice telephony or video room systems are not supported.
- Technology Risk Avoidance. The communications market is undergoing seismic upheavals—shifting technologies, user requirements, devices, even questions of UC platform supplier company survival. For enterprises needing to make a communications selection decision, these are perilous times. Going with UCaaS, even with multi-year commitments, offers the opportunity to postpone a capital investment until the alternatives become more clear.
However, there are some serious negative issues (cons) that may take years to be overcome.
Cons:
- Total Cost of Ownership (TCO). The sample 2,000 user RFP sessions at Enterprise Connect 2012, 2013, and 2014 all showed (see this article) very clearly that the 5-year TCO for cloud-based solutions is 60% higher on average than the TCO for on-premises solutions. Similar recent in-depth studies conducted by UniComm Consulting and KelCor, Inc. showed this same advantage for on-premises solutions from at about 1,000 users on up to 50,000 users, with increasing advantage in the larger organizations. Over some years, this difference will likely shrink and perhaps even reverse as the successful UCaaS service providers can amortize their investments over much larger numbers of customers and users. However, for now enterprises should proceed with caution to avoid significant negative disruptions to their budgets.
- Inflexibility and Lock In. For most enterprises who want dedicated instances of their UC solutions, the UCaaS contracts may have limited flexibility and require long-term contracts. It is possible that some early adopters of UCaaS may sign contracts for service offerings that are out of date or uncompetitive even while multiple years still remain on their UCaaS contract. While the UCaaS service provider may offer free upgrades to their own new releases or offers, that assumes the selected UCaaS service provider and the underlying UC platform provider will be leading the market in the directions needed by the enterprise customer.
- Functionality Limitations. As Gartner mentions, there is little consistency across UCaaS offers. It will be very important to have a clear and precise definition of the user and business requirements as the basis for the UCaaS provider selection. In addition, the future of UC is clearly going to be the integration of communications functionality into the users’ software applications used for their workflows and daily activities (e.g. salesforce.com, SAP, Oracle, Microsoft Dynamics, and many, many mobile device apps that will include communications tools in the user interface). Many UCaaS service providers either cannot or will not offer packaged modules or standards-based APIs for these application integrations. Even if custom interfaces are offered, there may be contractual limitations on support or service level agreements (APIs) if such plug-ins or customizations are in use.
So, where are the blessings and curses for UC? As blessings let’s count the lower barriers to adoption of UC – ease of entry, built-in UC, and service modularity – all of which make UC much more accessible to tens of millions more users than would be reached if the options were only available on-premises. As curses, though, let’s count the limitations of UCaaS – potentially higher costs, less flexibility, and functionality limitations – as well as the reality that the hype over the cloud will likely consume a significant portion of telecom, IT and CIO time to make what is, essentially, an outsourcing decision. These limitations and time diversions may be a major setback for UC innovation and advancement for the next three or more years.
It’s clear why the cloud is the big thing – some say the only thing – since there are many potential benefits. It’s also clear at this point in the evolution of UCaaS that customers should proceed with caution, having a clear definition of their requirements for at least the entire contract period of any UCaaS agreement. Lacking that longer-term view or clear definition, modularity and monthly payment plans may provide a safer way to get started with UCaaS. UCaaS is important, so don’t stay on the sideline, but don’t get caught up in the hype, either.