Weighing Cloud UC Options and Costs
December 19, 2012
Cloud computing is all the rage in the IT industry, and UC is no exception. While it's hard to find a concise market projection on the UC as a service (UCaaS) market, there are a number of telling signs regarding its health.
For instance, UCaaS provider 8x8 saw its revenue increase 33% year over year. ShoreTel Sky (formerly M5) saw its revenue go up 27% while seat count increased 36%. The company is carrying a backlog worth $550,000 in revenue because it can't keep up with installations. Broadsoft, which makes the UCaaS platform used by a number of providers including Comcast, Megapath and Verizon (which also sells Cisco Hosted Collaboration Solution or HCS), saw its revenues increase by 13%.
In reality, much of what is being sold as UCaaS is, in effect, a voice service, possibly with unified messaging thrown in. "Hosted IP PBX" might be a more descriptive moniker for this market. To my mind, UC starts with voice, but also includes IM, presence, Web conferencing and desktop sharing. Some of the offerings mentioned above, such as Cisco's HCS, include these features, but they are typically sold at an extra cost. Basic telephony is driving much of the action, particularly among small and midsize businesses where companies don't have the staff to maintain telephony or UC systems.
Cisco appears to have the biggest channel presence and has signed up a few dozen service providers including AT&T, Verizon and Sprint to sell its HCS offering. However, there are lots of other players. Gartner's 2012 Magic Quadrant for UCaaS had four vendors in the coveted Leaders Quadrant, and only one of them sold Cisco (and not exclusively). The four were West IP, Thinking Phone Networks, 8x8 and ShoreTel Sky. Note that ShoreTel Sky doesn't use the ShoreTel premises platform, nor does it support ShoreTel endpoints, though the company says it plans to.
Other IP PBX vendors are falling over themselves to get cloud offerings on line, including Avaya, Siemens, Mitel and NEC. Some, like Siemens and Mitel, have a good head start. There are also specialty suppliers such as Interactive Intelligence, which first moved its contact center solution to the cloud but now offers UCaaS, as well.
While most cloud providers start with voice, Microsoft takes a different approach with its Lync platform. It offers hosted Lync as part of Office 365, but de-emphasizes traditional telephony. Instead, it leads with features such as presence and Web-based conferencing, though it also includes the ability for PC-to-PC audio communication for Lync users.
Microsoft has six different SMB plans under Office 365, ranging in price from $4 to $22 per user per month. Only the most expensive package (i.e., "E4") offers telephony in what Microsoft calls Lync-to-Phone, but it requires a calling service from a qualified Lync partner. At the moment, Jajah Voice USA is the only partner listed, and unlimited plans range from $10.99 to $13.99 per user per month.
A cloud offering is appealing from a number of angles, including the ability to shift from a capex to an opex model, having access to UC capabilities immediately, and freedom from the headache of managing regular software updates while freeing up IT time for other more strategic initiatives.
However, it does come at a cost. At Enterprise Connect in March of this year, consultants Brent Kelly of Constellation Research, Marty Parker of UniComm Consulting and Dave Stein of Stein Technology jointly developed a mock RFP for both a premises-based (both with and without a new PBX) and cloud-based UC solution for a 2,000 person firm. Their summary findings are reported here, but the long and short of it is that over 5 years, the cloud solution from every responding vendor was appreciably more expensive than any other option.
That's not to say that UCaaS won't sell. Rather, to get the best value users should look at how best to use it. Organizations find that not every employee necessarily needs what UC has to offer. So they can leave users who have only moderate requirements on the existing premises-based systems, while providing UC services to those who can most benefit from them through the cloud.