Elka Popova's Blog


Looking into the Crystal Ball: What Does 2013 Have in Stock for the UCC Market?

30 Nov 2012

As the new year approaches, we are all trying to predict what it will be like for the unified communications and collaboration (UCC) market and the information and communications (ICT) industry as a whole. We wish to know what tools and technologies will best resonate with end users and what decision-makers who hold the company budget will choose to invest in.

With flailing European economies, concerns about the Chinese markets, and a fiscal cliff threatening a recession in the U.S. and neighboring countries, the North American UCC market must prepare for an uphill battle in 2013.

The UCC industry is also morphing from within as technologies mature and converge. While technologies are evolving faster than ever before, disruptive innovation is becoming rarer and harder to accomplish.

Moreover, businesses have become more conservative in their technology investment practices under pressure from more frequent economic downturns and the need for greater caution in aligning their ICT roadmap with continually evolving technologies. To an extent, rapid technology evolution is slowing down mainstream technology adoption.
There are, however, pockets of the UCC market where technology adoption is on the rise, primarily where UCC solutions most effectively address specific IT or end-user pain points or broader mega trends.

Here follow some highlights from recent Frost & Sullivan surveys of North American C-level decision makers and IT management that provide a glimpse of what 2013 is going to be like for the UCC market.

Budgets: Sixty-five percent of respondents expect budgets to stay the same in the coming year; only 35 percent expect an increase. More recent macro-economic developments may further shifts budget plans toward the more conservative end.

IT Operational Challenges: Less than half of the respondents believe that their IT infrastructure allows them to work more efficiently. Less than a third believe that they are able to make effective technology investments and that their IT and business strategies are well aligned. Only 20 percent state that their IT staff is able to work on more strategic projects.

Technology Challenges: Devising and implementing a mobile strategy and leveraging social media in the enterprise and with customers rank as most important among technology challenges.

Consumerization of IT: The vast majority of respondent organizations (71 percent) allow the use of consumer devices and applications in the enterprise, even though only 44 percent provide full or partial support for these tools.

Organizational Transformation: Currently, 26 percent of the respondent organizations’ workforce is either mobile or remote. Within the next five years, this percentage is expected to increase to 32 percent.

Investment Criteria: Security and price rank much higher than any other investment criteria including technology maturity, cutting-edge features, and open standards.

Social Media: Social media tools are expected to see much greater increase in usage next year compared to any other applications, though increased usage is expected for all UCC tools surveyed.

Mobility: Tablets are likely to see the greatest increase in usage among all communications endpoints.

Video: Video conferencing is much more extensively used on desktop PCs and laptops than on room systems or telepresence solutions.

Infrastructure Optimization: Almost half (49 percent) of the respondents currently use multi-vendor technologies that are not integrated. Within two years, this percentage is expected to decline to 24 percent with the rest of businesses almost equally split between single-vendor solutions and more tightly integrated multi-vendor architectures. UCC virtualization is only now gaining traction.

Alternative Delivery Models: Currently, 25 percent of respondents use hosted services. More than half anticipate increased usage over the next 12 months. Also, 42 percent of non-users expect to deploy hosted services in the future.

Competitive Landscape: Macro-economic and industry-specific trends have combined to drive growing consolidation and considerable merger-and-acquisition (M&A) activity in the UCC market.

Overall, external and industry-specific forces have set the communications industry well on its way to becoming absorbed in the broader IT industry, which will have a profound impact on the industry’s ability to grow and generate profits in the future. This trend will determine the evolution of the UCC market in 2013, but more profound transformation will unfold in the years to come. However, pockets of disruptive innovation in mobile, social, visual, and cloud technologies will drive customer demand and industry growth both in the near and the long term.

Will Software Make Headsets the Smartest UC Devices in the Future?

15 Nov 2012

 

Maybe not the smartest, but certainly VERY smart!

Headsets have come a long way since the early days when they were just dumb peripherals with no intelligence of their own. Even those simpler headsets gave the user comfort and flexibility and the benefit of noise cancellation. In fact, I am using one of those now, mostly because of its simplicity and reliability.

There are new headset models available that offer advanced functionality such as call control, caller ID, voice recognition, and the increasingly important multi-device connectivity. Functionality and price vary significantly by model, but the variety of new headsets and headset features is increasing faster than the variety of new models and features in the desktop phone space (granted, the starting point is different). Headset vendors are now offering dual-mode and even triple-mode headsets—providing connectivity for mobile phones and soft clients, or for mobile, soft, and desktop phones. Noise cancellation and physical device specs (ergonomic design, size, coating, battery life, etc.) are also continually improving.

But the holy grail of future innovation in headset design is in software applications. Headset vendors are already competing based on the software capabilities of their devices, and this trend is likely to intensify in the future.

I wouldn’t venture to list and analyze all advanced headset models available on the market today. The leading headset vendors are all constantly announcing new models and capabilities, and are leapfrogging each other in terms of innovation. I would recommend, however, that you check out a few specific models, which I have tested and can speak about from personal experience.

For example, the Jabra PRO 9465 Duo offers some highly advanced functionality. It is a wireless, triple-mode headset that connects to mobile devices, desktop phones, and UC clients. It even enables conference calling with 4 headsets connected to the same base. One of the key benefits of this device is the Jabra PC Suite which enables remote call control. Headset users can answer and end calls away from their desk and softphone. The PC Suite can also be used with a corded headset, with the remote call control functions being placed either directly on the headset or as in-line buttons on the cord. I have used Jabra Go and Jabra PRO models and I can attest to their high quality and considerable benefits.

I have also used various Plantronics headsets. I am a bit embarrassed to admit that my favorite one is the simple, corded, desktophone-only headset I mentioned earlier; but it JUST WORKS! 

Plantronics does offer some highly sophisticated headsets such as the Savi 700 series, which features multi-device connectivity for mobile, desktop, and UC environments, as well as software support. However, its latest Voyager models, more specifically the newly introduced Voyager Legend, feature some truly unique characteristics. The Voyager Legend supports only mobile and soft phones, but it provides other benefits. It offers up to 7 hours of talk time; 3 Mics; significant improvements in wind noise reduction; caller ID/name announcement for incoming calls; the ability to answer or ignore incoming calls by using voice commands (though this is available for mobile phones only); and a voice recognition button for connection and battery status.

In addition, Plantronics has invested a significant amount of R&D into its Smart Sensor technology, integrated into the Voyager Legend headset lineup. The technology senses when the headset is on or off the user’s head/ear and makes smart decisions whether to connect the call automatically or to announce the call and wait for a voice or touch-tone command. Since the Voyager Legend also supports streaming audio, the sensor pauses the streamed audio when a call is coming in or when the user has taken off the headset. Putting the headset on the user’s ear also transfers ongoing calls from the handset to the headset. Using Plantronics Vocalyst technology, the Voyager Legend allows the user to hear e-mails and newsfeeds.

Another interesting capability on the Voyager Legend is the Find MyHeadset Android app, which helps you find a misplaced headset either by sending a tone and listening for your headset to respond via tone, or by reviewing recent activity and using the GPS capability on the cell phone to locate the last place the headset was used.

Plantronics is also focusing on contextually-aware communications—a strategic direction not uncommon among UC vendors, but relatively novel for a headset vendor. Its Smart Sensor technology and other advancements on the software side are enabling its devices to react based on the user’s status, availability, location, and other contextual factors. Through in-house technology development as well as partnerships, Plantronics is looking to tightly integrate the headset with various UC and other applications.

As mentioned earlier, software enablement is a common thread in headset product development and all vendors are more or less on the same path. But can they do it alone? The UC market has proven that no single vendor can sustain high levels of innovation without partnerships with other software developers.

It is significant that Plantronics has established its own developer community. Again, this is a common practice among UC vendors, but a new trend in the headset market (I still draw a line between core UC application developers and device/peripheral manufacturers, but maybe I will need to re-consider this classification in view of current developments). Plantronics’ developer site allows partners to download its SDKs and to access Plantronics’ engineers and documentation. Partners are helping Plantronics develop contextually-aware solutions through integrations with communications and collaboration applications (e.g., voice, e-mail, and conferencing), social media, CRM, sales force automation, analytics, and more. Partners include Datahug, Epilio, Five9, Interactive Intelligence, Jive, prairieFyre, PGi, Sococo, ThreeWill, and others.

Partner communities/eco-systems bring a lot of benefits to the vendors as well as their customers. Technology alignments provide partners with insights into each other’s R&D roadmaps and enable them to develop, test, and trial deeper integrations of their technologies. Such integrations result in more holistic solutions for customers and also spare them the cost and hassle of performing the integrations themselves. Furthermore, partner products and solutions are often incorporated into each other’s catalogs,  which provides opportunities for co-marketing and the ability to leverage each other’s reseller channels. Finally, technology partner programs help to increase visibility for smaller developers.

In conclusion, I believe that headset vendors’ increasing focus on software development and creation of partner communities and eco-systems will drive innovation in the headset market and will help transform headsets into smarter and truly multi-functional devices that enhance productivity and deliver superior benefits to customers.

Single-vendor or Best-of-breed UC Architecture: Decision Makers Have Cast their Vote

08 Nov 2012

Frost & Sullivan recently conducted a survey of 263 North American IT decision makers including C-level executives and IT management. The survey explored awareness and usage of various unified communications and collaboration (UCC) tools and applications, trends in communications devices, ICT infrastructure, and hosted and managed services, and budget plans.

One of the questions we asked was about the type of UCC infrastructure businesses are deploying today and the way they expect it to evolve over the next two years.

Not surprisingly, almost half (49 percent) of respondents state that they are using multiple products from multiple vendors that are not tightly integrated. Of the rest, 31 percent are currently using single-vendor UCC solutions and 20 percent are using tightly integrated multi-vendor solutions. However, the data indicate a strong shift toward the latter two types of UCC architecture over the next two years. Only less than a quarter (24 percent) of survey respondents envision having a multi-vendor, non-integrated UCC architecture in 2014.

The move away from disparate multi-vendor solutions does not surprise anyone. It takes a huge cost and effort to support and maintain diverse technologies within the organization. Furthermore, different product  lifecycles and technology evolution roadmaps require constant IT staff training and retraining and a lot of focus on managing multiple vendor relationships. From an end-user point of view, the benefits of “unified” communications (productivity, efficiency, etc.) are lost.

The more interesting result is the almost equal split of those choosing a single-vendor architecture and those going with tightly integrated, best-of-breed solutions. Very much like the U.S. electorate, IT decision makers must be seeing compelling reasons to choose one option over the other based on some specific factors within their organizations. Single-vendor architecture seems to be winning the popular vote with 40 percent of respondents against 37 percent for tightly integrated multi-vendor solutions.

However, the bigger shift over the next couple of years is towards integrated best-of-breed solutions. While the percentage of those using single-vendor architectures is expected to increase by only 9 percent from 31 percent in 2012 to 40 percent in 2014, the percentage of those choosing integrated best-of-breed solutions is likely to grow by 17 percent from 20 percent in 2012 to 37 percent in 2014.

Adding together those using non-integrated multi-vendor technologies with those using integrated multi-vendor technologies, the broader group of best-of-breed architecture proponents is the clear winner with 60 percent of total respondents in 2014.

Here is how we see the advantages and disadvantages of both approaches:

Single-vendor UC architecture

Benefits:

  • Deeper interoperability and integrations among various UC components
  • Deeper discounts when deploying a broad applications set from the same vendor
  • Streamlined management and maintenance of multiple applications
  • Fewer vendor relationships to maintain; greater vendor accountability
  • Single-vendor roadmap/vision – smoother and more predictable evolution 

Challenges:

  • Lock-in with a certain vendor and technology stack
  • May force price, functionality, performance or other compromises
  • More complex management and maintenance of heterogeneous solutions
  • Potentially limited ability to protect existing technology investments
  • Single-vendor roadmap/vision – innovation and choices may be limited

 

Best-of-Breed Ecosystem 

Benefits:

  • Reduced risk of vendor or technology lock-in
  • Choose platforms based on price, features or performance
  • Often more open and flexible platforms/ technologies
  • Greater choices within broad partner ecosystems

Challenges:

  • Potentially limited interoperability and integration across multiple vendor platforms
  • Multiple vendor roadmaps may pose challenges in the long run
  • Comparatively more complex management and maintenance

In conclusion, I wish to reiterate that multiple factors can dictate the use of one approach over the other. Those could include existing investments, vendor relationships, quality and reliability of specific products and solutions, as well as the weight and importance assigned to any of the criteria listed above. Yet, decision makers have cast their vote.

Will Abundant Data and Advanced Analytics Kill Profit Margins?

24 Sep 2012

Some of the most exciting technology topics today include social search, data mining, and, in general, big-data analytics. These technology trends can determine some very personal decisions (e.g., which restaurant to go to), but can also have a very powerful impact on broader investor decisions and financial markets. This article on Facebook and friend mining made me ponder this issue again.

Online content, Web search, e-commerce, and social networking produce and retain tons of data that can be processed and analyzed and used for various purposes. Some of the data are already being harnessed for targeted marketing and advertizing purposes, but the potential is much bigger. The main reason why the potential has not been fully exploited so far is the lack of analytical tools that are sophisticated and powerful enough to uncover all the hidden gems of useful information.

For example, it must be simple enough to run a search of most liked restaurants among your Facebook friends and come up with a single favorite among all. But how about running more complex algorithms and deciding if you should travel a few miles to get to a place less poplar in terms of total votes but more popular based on some kind of a weighted average? For example, wouldn't it be wiser if you based your decision on the percentage of “likes” among your friends living in each particular location or having visited certain locations (e.g., weighing the data by a new criterion)? In other words, if 5 out of your 15 friends (30%) living in San Francisco voted for a Thai place in the city, does that make it a better choice than a Thai restaurant in Menlo Park that 3 out of your 3 friends (100%) living in Menlo Park or having visited Menlo Park liked and favored?

My example may be not be very scientific, but it just illustrates the value of designing the right algorithms when running any kind of search or performing data analysis. At the end of the day, humans design the processes in complex data analytics, and the analysis is only as good as the variables and correlations selected by these individuals. 

Overall, there is a huge potential—for technology vendors, applications developers, and users—in data mining and analytics. But there are also multiple concerns related to data sharing and data usage by third parties. For example, social networking users are becoming increasingly concerned about privacy and are posting fake names, birth dates, and other facts about themselves to try and hide from prying eyes. Therefore, it will become increasingly challenging for data analytics to sort through the real and the fake pieces of information.

A comment someone posted on Twitter related to the Facebook article above made me think about yet another implication of over-connectedness and efficient data sharing. That person asked “Doesn’t this make our world smaller and smaller?” I believe it does, in many ways.

It is becoming easier and faster for information to cross this increasingly “shrinking” world. Which begs another interesting question: how will abundant, pervasive, and rapidly disseminated information impact profit margins? According to common economic theories, in a perfect market, buyers and sellers have equal and prompt access to market information, which creates a kind of market equilibrium and eliminates the possibility for excessive profits. The truth is, perfect markets do not exist and that has created ample opportunities for profit creation. But are we getting dangeriously closer to that state of almost-perfect access to information thanks to continued advancements in communications and information technologies and data analytics? Because it is important to remember that profit could be a dirty word to the under-privileged, but, in capitalist markets, profits (or the promise thereof) drive competition and innovation, which in turn help raise the standard of living.

At Frost & Sullivan’s GIL event just a few weeks ago, there was a very interesting panel of the so-called Legends of Silicon Valley. This year, our guests included Bill Davidow, Judith L. Estrin, Kim Polese, and T. J. Rogers—amazing individuals who have had a tremendous impact on Silicon Valley and technology development. One of the questions Mike Malone, the panel moderator, asked was about innovation in Silicon Valley (and beyond) and the future potential for a competitive advantage and profits.

Opinions varied and various arguments were presented in favor of each point of view. But my takeaway was that, even though it is becoming harder to experience disruptive innovation on a large scale resulting in copious profits (which could describe the state of Silicon Valley in the 1990s), there will always exist pockets of innovation and opportunities for a competitive advantage and money-making. What will drive progress is the ability to identify niches of unaddressed market needs and react nimbly and efficiently by developing products and solutions that address these needs.

Technologies may be developing at a lightning speed and information may be travelling even faster than that. But there is always the human factor. Individual investors can only process so much information without becoming overwhelmed. And even prompt access to all the information in the world does not always translate into wise investment decisions. Therefore, while I acknowledge the disruptive potential of advanced data mining and analytics tools, I would still bet my money on an imperfect market where information will never be equally accessible to everyone and hence there will always be opportunities for innovation and differentiation, and, fortunately or unfortunately, for financial speculation as well.

Augmented and Virtual Realities: How Real are They?

13 Sep 2012

Last night I came back from our 2012 Growth, Innovation, and Leadership (GIL) Congress, which was held in San Jose, CA. GIL is different from most other industry events for several reasons. It does not focus so much on the issues and challenges of a single industry, but rather on the points of convergence of multiple different industries. It also looks to identify common trends across these industries that may be defined by socio-demographic, economic, or other factors. Finally, it is highly interactive. Participants get to work on various small projects (MBA school-type team activities) and, in the process, identify interesting trends, issues or even market opportunities.

I particularly enjoyed one of these team activities where we were tasked to identify a major trend in the enterprise communications and collaboration market and to develop both an evolutionary and a revolutionary scenario of this trend based on our vision for what life will be like in 2022.  It’s a lot of fun trying to predict the future that far ahead; it’s even more fun doing it with people from diverse backgrounds who bring different perspectives to the discussion.

My team included two other analysts, a VP of Product Management from an ISP, a VP of Digital Innovation from a real estate firm, and a Product Manager from another client organization.

We briefly brainstormed on the multiple trends impacting the communications market and agreed to focus on the user interface and, more specifically, on the “designed experience”. There is a growing focus on the user experience as we become equipped with multiple smart devices and increasingly require highly personalized, visual interfaces. Application developers are responding by developing flexible solutions that can be customized based on specific user requirements. In fact, some vendors are now talking about the “personal cloud”—the idea of creating applications, interfaces, and delivery models that tightly fit user preferences.

What will be the user experience ten years from now? I usually take a conservative stance, so I would bet on a gradual evolution. Vendors will develop a number of interface templates for various user types—the mom, the teenager, the executive, the knowledge worker, etc. Additionally, applications will be flexible enough to let users further personalize the interfaces with ringtones, images, and a layout that best fit their needs and their personalities. By 2012, everything we access on a computing device will allow some degree of personalization and customization. There will be an increasing number of virtual environments and virtual realities—for gaming, dating, business meetings, and other purposes. Those may or may not include real-life images, sounds, or other real-life attributes. There will be augmented realities, too. Actual images from real life will be augmented with virtual elements, such as tracked movements or virtual boundaries, real-estate prices, and broker contact information, or with real-life, but computed information such as GPS coordinates.

But my team thought we could envision a future where all communications and collaboration devices and applications, as well as many other business and consumer tools, especially those on the Web, will feature virtual and augmented reality interfaces.  A mobile device (e.g., a smartphone or a tablet) would capture a live image and then overlay GPS, weather, and other relevant information (such as restaurant reviews, theater schedules, etc.) on top of the image. An incoming call or message will immediately pull up social networking and other context on the calling or messaging party and may even symbolically present that person’s avatar as trying to enter a virtual reality (or the called party’s “personal space”).

Some of this is happening today. But we can push the boundaries of our imagination further. Maybe glasses that place us in virtual environments or present augmented reality would become commonplace by 2012 and one would be able to purchase them in the store around the corner? Maybe, by then, most collaboration and social networking interfaces will be 3D with avatars, sounds, and movements, and other real and imaginary contextual information creating an ambiance specifically designed (yet, most likely ad-hoc) for the particular type of call and/or audience? Just imagine a world, where reality is commonly enhanced with virtual context and where we frequently transition from this augmented reality into various virtual realities, thus living double and triple lives.

There is an eerie Dr. Jekyll and Mr. Hyde sensation about this vision. But then, that’s just me. I don’t play video games and I find virtual environments distracting. I have not even experienced an augmented reality to be able to say how I feel about it. But Generation Y that is gradually gaining purchasing power and infiltrating the workforce is very tech-savvy and heavily equipped with computing devices. They are heavy Internet users and are plugged in 24/7. They are used to webinars and online presentations and seek visual experiences. They also crave attention and seek feedback through social media and other collaborative tools. They have no problem with split personalities and like to hide in virtual realities. This generation and the ones after it will probably create and experience augmented and virtual realities on a much broader scale than we can imagine.

Is there money in this for vendors and application developers? I am sure there is and I would bet my money on the consumer rather than the business buyer.

New Business Models Reshape the Hosted Communications & Collaboration Market

11 Jul 2012

I have been tracking the North American hosted IP telephony and unified communications (UC) market for over a decade and have always found it tremendously exciting. Nimble, entrepreneurial companies have been quick to pursue this opportunity, continually innovating and valiantly overcoming the numerous hurdles thrown their way by shrewd competitors and demanding customers. It’s been a great pleasure to develop relationships with the amazing people who run these companies and learn from their insight and broad industry experience. I still remember my early conversations with 8x8, BroadSoft, CallTower, Covad, M5 Networks, Pingtone, Telekenex and other pioneers in the hosted space. These companies shaped the hosted IP telephony market and did all the hard work of educating customers and competitors about the benefits of hosted communications long before cloud became a trendy word and everybody flocked to be a cloud provider.

The market has grown at a steady pace over the years. According to my estimates, in 2011, the North American hosted IP telephony and UC services market grew at 42.5 % in terms of installed lines and 35% in terms of revenues. I expect the market to continue to grow at about 30% in terms of both installed lines and revenues over the next six years.

Now the market is going through a major transformation. The cloud hype and changing market conditions have resulted in a flurry of announcements by new market participants, causing positive excitement for some and serious grief for others. More specifically, the PBX vendors are bringing the heavy artillery to the hosted market. Most of their solutions are multi-instance, virtualized platforms that use shared hardware and dedicated software instances to address the needs of larger, more demanding and security-conscious business customers.

Here follows a brief summary of key PBX vendors’ cloud and hosted offerings.

Mitel was one of the first PBX vendors to launch a portfolio of hosted/cloud solutions. The Multi-Instance Communications Director (MICD is targeted at service providers looking to brand their own hosted IP communications services and provide all billing and management support. MICD is a high-density platform that competes directly with the more “traditional” hosted IP telephony platforms (such as BroadSoft’s) and appears best suited for small and medium-sized (SMBs) looking for standard PBX functionality, along with voicemail, twinning, and basic conferencing. Mitel Anywhere is an MICD-powered service provided by NetSolutions, Mitel’s carrier division. Virtual Mitel Communications Director (MCD), on the other hand, is available to service providers looking to target a slightly different customer base—typically larger businesses with hybrid (hosted and premises-based) environments.

As always, Siemens Enterprise Communications was also quick to market with an innovative technology and delivery model. Siemens’ OpenScape Cloud solution leverages Siemens’ UC suite to deliver a broad set of communications and collaboration applications to businesses looking to outsource their communications infrastructure. Siemens has chosen to use data-center partners to host the platform and to sell exclusively through its channel. Siemens also had some OpenScape Voice implementations with service providers such as Postrack and Engage prior to the launch of the new solution. Even though the OpenScape Cloud solution was launched more than a year ago, Siemens has shared little about the success of this offering.

Cisco initially forayed into the hosted market with its Hosted Unified Communications Services (HUCS), but this product saw limited success. It is now heavily marketing its Hosted Collaboration Solution (HCS) solution and claims over 20 partners globally.

Verizon was the first one to launch an HCS-based unified communications as a service (UCaaS), which is intended to complement, not replace its hosted IP Centrex (HIPC) service. AT&T followed suit with an HCS-based service, differentiating through a more sophisticated user client. Soon after, Sprint launched its own UCaaS service with a unique value proposition around advanced mobility features. EnPointe is betting on its advanced contact center capabilities, complementing the core HCS suite, and SpanLink is looking to deliver a similar value proposition, but in a partnership with Convergys. Inteliquent is positioning itself as a wholesale provider focusing on platform management and using partners to interface with customers. West IP Communications is already reporting significant traction of its HCS-based service (complementing its heritage hosted IP telephony offering), but mostly in Asia. Cypress Communications, now Broadvox, has launched an HCS-based service along with its heritage solutions based on GenBand A2 and C20 and BroadSoft . Most of Cisco’s partners are targeting large businesses, primarily those with existing Cisco infrastructure. One of the key benefits of the HCS platform is customer ability to preserve Cisco IP phones and even port Cisco licenses.

Microsoft is attacking the market from a different angle. With its Office 365 offering it is mostly targeting small businesses looking for an all-in-one package of business and communications applications. But Lync in Office 365 doesn’t support PSTN connectivity, so it’s not a true PBX-replacement offering. However, recently, Microsoft introduced a multi-tenant Lync platform for its partners to deliver hosted telephony and UC services. Interest appears to be very high among partners and I expect to see a plethora of hosted Lync offerings in the near future. In fact, an entrepreneurial company called GeniSys Global engineered a multi-tenant platform out of Microsoft Lync Enterprise and has been delivering hosted Lync services for over a year now.

Avaya, somewhat surprisingly, forayed into the hosted space with a small-business, over-the-top cloud offering dubbed AvayaLive Connect. Using its web.alive platform (now rebranded as AvayaLive Engage) for the e-commerce portal and Nortel’s SCS technology at the back end, Avaya is targeting businesses that look for on-demand usage and billing, quick and easy provisioning, and relatively simple functionality. The solution features basic PBX functionality, voice conferencing, voice/unified messaging, video, mobility, presence, and instant messaging (IM)/chat. The solution supports PC, Apple Mac, iOS and Android devices. AvayaLive Connect is part of a broader framework and portfolio—Avaya Collaborative Cloud. I expect Avaya to launch a large-business cloud solution as part of this framework in the near future.

Alcatel-Lucent has a cloud solution based on its OpenTouch architecture that can be deployed on premises or as a hosted, multi-instance platform targeting larger business. It is likely to use the OpenTouch architecture to enable partners to deliver hosted services to small businesses as well.

Earlier this year, NEC launched UNIVERGE Cloud Services/UCaaS. The initial offering is a comprehensive suite of voice, data and video services accessible through a Web-based end-user client that can be deployed on any device, including PCs, smartphones and tablets. As of Q2 2012, UNIVERGE Cloud Services UCaaS were expected to be available in three packages—basic, standard and premium – specifically designed to be offered through NEC’s broad network of authorized dealers, as well as directly from NEC’s enterprise sales group. 

Most recently, Toshiba announced its VIPedge cloud offering, hosted in Toshiba’s data centers and delivered through its vast network of dealers. As the name suggests, Toshiba’s IPedge is at the foundation of the new cloud solution, which offers all the functionality of the premises-based platform, including PBX features, voice messaging, PC-based call control, soft phone, presence, instant messaging, integrations with CRM and other business applications, and mobility.

ShoreTel chose a different route to the hosted IP telephony and UC services market. Instead of developing a hosted or cloud solution in-house, it acquired M5 Networks, a leading provider of hosted communications. M5 has leveraged BroadSoft’s platform to develop its own robust, customized SaaS  back end, which allows it to better manage the applications and network and be more agile with new features and capabilities. ShoreTel ‘s partner channel is likely to provide significant growth opportunities for the cloud offering.

This article is already too long to delve into the advantages and disadvantages of the different solutions and business models. But the key implications of these new developments are as follows:

  • End users can enjoy a continually expanding array of hosted/cloud options available to them.
  • New platforms launched by PBX vendors offer a broader set of pre-integrated capabilities than most multi-tenant solutions.
  • Multi-instance platforms are allegedly more secure as each customer receives a dedicated instance of the software.
  • With the new business models, end users can continue to do business with their trusted value-added resellers (VAR) and local interconnects even as they migrate to hosted solutions (unlike the past, when hosted solutions were only available through telecom carriers).
  • The success of each individual vendor is largely dependent upon the strength of its channel and its partners’ willingness and ability to promote hosted solutions. S
  • Special programs, incentives, and, more important, education and training will be critical to partner success.
  • The more traditional multitenant solutions (e.g., BroadSoft’s platform) will continue to offer a more economical and easier-to-manage infrastructure for service providers targeting businesses with fewer customization and security concerns.
  • Regardless of the platform used on the service provider network, businesses need to make a choice whether they wish to deploy a managed or an over-the-top solution. The quality of public broadband has greatly improved over the years, but a managed solution can provide the business with a peace of mind with regard to service availability and quality.

Check these links for additional insight on the hosted market:

• My Enterprise Connect presentation on hosted IP telephony and UC services (to access, use: Username: 12enterprise, Password: connect12)
• Avaya Collaborative Cloud Goes Live with AvayaLive Connect

 

Avaya Collaborative Cloud Goes Live with AvayaLive Connect

06 Apr 2012

It’s been more than a week since I returned from Enterprise Connect in Orlando, but I only now found the time to put together my thoughts on some of the key announcements. As expected, cloud was one of the key topics at this major industry event. Coincidentally, I am also in the process of updating Frost & Sullivan’s North American Hosted IP Telephony & UC Services Market study, which makes this topic particularly interesting to me. I also had the honor of presenting on hosted UC at one of the general sessions (slide deck available upon request).

At Enterprise Connect, Avaya launched a long-anticipated cloud strategy and portfolio dubbed Avaya Collaborative Cloud (see press release). With several leading PBX vendors already boasting cloud solutions (more specifically, multi-tenant or multi-instance platforms hosted by the vendors themselves or their partners and delivered as a service to business customers), Avaya is somewhat late to the market with the announcement of a cloud strategy. It should be noted that all PBX vendors (including Avaya) are developing virtualized versions of their premises-based platforms for private, internal clouds. But the more interesting phenomenon is their foray into the hosted, public cloud space.

 

Avaya Collaborative Cloud is a framework, a broad umbrella for a series of cloud solutions that will become available over an undefined period of time. The first product in this suite to be launched shortly (by mid-2012) is AvayaLive Connect—a public cloud solution targeted at very small businesses of up to 20 users. The solution will be available for purchase through a Web portal (using Avaya web.alive technology, now rebranded as AvayaLive Engage). At the back end, the solution will be powered by the former Nortel SCS technology. The solution will feature basic PBX functionality, voice conferencing, voice/unified messaging, video, mobility, presence and instant messaging (IM)/chat. It will support PC, Apple Mac, iOS and Android devices.

The key selling point, according to Avaya spokespeople, is the speed and ease of deployment. Basically, small business owners can swipe a credit card, download the soft clients, and start using the solution within minutes. Hard phones are available for purchase, if required. Currently, the solution only supports Avaya desktop phones, but third-party phones can be tested and certified based on customer demand.

Another key advantage appears to be the solution’s price point. While Avaya has not publicly announced its pricing structure, I challenged them to compare their anticipated pricing to the broad range of hosted voice/UC solutions currently available in the market. In North America, businesses can find a hosted voice solution for as little as $25/user/month, no bandwidth included, with bundle fees ranging all the way up to $100/user/month with access line, contact center functionality, and all kinds of bells and whistles included (even hardware sometimes). Avaya spokespeople claim their solution will be very competitively priced vis-à-vis those other options. The flat monthly fee will include all features and capabilities, as well as local and long-distance calling.

As is obvious from the feature/functionality description of AvayaLive Connect, it very much resembles a Skype solution. Skype appears to be even ahead of Avaya with some recently launched desktop sharing capabilities. However, Avaya has another advantage in that it offers 800 numbers and a business auto attendant that can help small businesses present a more professional appearance to customers and partners calling from outside. It should be noted that plenty of other hosted business VoIP solutions include an auto attendant as well as more advanced PBX features, such as a receptionist console, hunt groups and even ACD capabilities. Based on my discussions with the Avaya team, I feel that more features and functionality (including desktop sharing) may become available in the near future.

I have to admit that the launch of AvayaLive Connect came as a surprise to me. With Cisco betting heavily on its Hosted Collaboration Solution (HCS) targeted at larger businesses, and several dozen service providers targeting the North American small business market with a broad array of hosted solutions, I would have expected Avaya to leverage its Session Manager (originally a telco platform) and its Aura Architecture to go after larger businesses straight from the start. However, it seems to be using AvayaLive Connect as a proof of concept, and as a means of fleshing out its business strategy for delivering cloud solutions to larger businesses. I am confident that we will soon see a more HCS-like service from Avaya. In the meantime, AvayaLive Connect promises to be as appealing as any other over-the-top hosted UC solution out there, but it is tough to figure out what its key differentiators are going to be.

One of my key concerns is that it is delivered over the public Internet. Many application service providers (ASPs) got burned with their early Internet telephony offerings. The more successful service providers quickly acknowledged the importance of managing the solution all the way to the desktop. Small businesses with no in-house technical expertise choose hosted offerings for the convenience and simplicity, but they also need it to work properly and appreciate having a single throat to choke (as in the case of a service provider delivering a PBX+bandwidth type of a bundle). When the solution is offered over managed bandwidth, the provider has much greater control over the quality and reliability of the service, which helps ensure customer satisfaction and better customer retention rates. It is true, however, that the public Internet has become a lot more reliable over the past few years. It is also true that, due to customer demand, many service providers are now introducing bring-your-own-bandwidth (BYOB) offerings for businesses that choose to deploy their access line from a different provider.

Avaya has announced a partnership with Level 3 for a managed-bandwidth offering and potentially a white-label service marketed by Level 3. In my opinion, such an option will be quite appealing to more demanding customers where service reliability is of critical importance. Avaya did not make a statement about tech support, but I hope it makes it easy and convenient for busy, possibly low-tech business owners to not only deploy, but also maintain a cloud-based communications solution.

I have a few outstanding questions for Avaya, as follows:

  • Who will be providing dial tone (along with E911, CALEA compliance, etc.)? Will Avaya be acting as an intermediary for its business customers or will they be handling this on their own?
  • Federation appears to be a key focal area for Avaya. Will AvayaLive Connect become federated with other IM or voice solutions (something small businesses may find quite appealing when dealing with other small businesses)?
  • What integrations are planned for the future—both with other hosted/cloud solutions and premises-based platforms and applications? CRM integration is a big trend among hosted providers today (driven by customer demand).
  • Are there any advantages to deploying AvayaLive Connect as a branch-office solution where the main office is deploying Avaya infrastructure?
  • I am also curious how Avaya is planning to reach out to the extremely fragmented small business customer audience. For now, it appears Avaya is planning to use mostly e-commerce tools. I believe some consumer-type advertising (TV, radio, retail outlets, printed media) may be effective with small business decision makers. Other hosted providers have also found that an agent network can help reach their target audience.

Overall, I would encourage small businesses to give AvayaLive Connect some serious consideration as a viable cloud option. I’d be glad to help compare the solution to other hosted solutions once it becomes commercially available.

 

 

Have we Reached an Inflection Point in the Hosted Communications Market?

28 Apr 2011

The North American hosted IP telephony and UC services market is growing rapidly, driven by maturing technologies and business models, and increasing market awareness of both the availability of such services and their specific benefits. The hype around cloud technologies has also contributed to growing customer interest in hosted/SaaS services, in spite of, or maybe even due to, some confusion about the meaning of these terms.

The lingering impact of the economic recession slowed down market growth in the first half of 2010. Most businesses were still wary of making significant new investments or major changes to their IT and communications infrastructure. However, in the second half of the year, more businesses were prepared to make a change and many of those seriously considered, and some actually adopted, hosted services for their flexibility and lower CAPEX requirements.

With about 2.1 million installed lines/users/seats in 2010, the market is projected to reach 15.0 million users in 2017, growing at a compound annual growth rate (CAGR) of about 33.74 percent in terms of installed lines/users/seats and 37.00 percent in terms of revenues. Over the next decade, hosted IP telephony users are likely to reach about 27 million users, which will represent about 20 percent of the total business telephony user base in 2020. It should be noted that these estimates only include business-grade, PBX-replacement services. Consumer VoIP services (such as Skype, for instance), even when used for business purposes, are not included.

The market remains highly fragmented, with over 50 market participants offering a broad spectrum of hosted IP telephony and UC services. Tiers of competition are not clearly delineated and most service providers hold market shares of less than 10 percent. Next-generation VoIP providers such as 8x8 and Smoothstone focusing entirely or primarily on business IP telephony services continue to lead. However, the incumbent carriers, especially Verizon, are becoming increasingly aggressive with their hosted IP telephony offerings.

As service providers seek to differentiate and offer greater value to their customers, they are increasingly adding new features and capabilities such as presence, messaging and conferencing to their service bundles and are marketing these as UC solutions. The number of users of comprehensive UC solutions with integrated presence and an advanced soft client providing a single point of access to a broad set of applications is, however, still very small.

We had previously predicted that the market will bifurcate into low-end, basic telephony services and advanced UC solutions. While we continue to maintain that features and functionality will provide some degree of differentiation, we believe that the key differences between services targeted at the most cost-conscious, typically very small, businesses, on one hand, and advanced solutions targeted at more demanding, typically larger, businesses, on the other, will reside elsewhere. The degree of service availability, QoS and performance management, as well as the flexibility to customize the solution and integrate with various premises-based platforms and applications for hybrid architectures will have the largest impact on the cost and value of hosted services and their appeal to different customer groups.

Look out for a new study titled North American Hosted IP Telephony and UC Services Markets coming up soon. Also, please feel free to contact me for any further insight of this rapidly growing market. 

Bill Vass, Former CIO of Sun Microsystems, on Technology Trends in 2011 and Beyond

22 Dec 2010

As part of our ongoing coverage of enterprise IT and communications technologies markets, we talk to executives with a successful track record of technology implementation, who share their insights on future technology trends. In this article, we talk to Bill Vass, former CIO of Sun Microsystems, who discusses virtualization, cloud and mobility.

With more than 30 years of technical and IT management experience, Bill Vass is an industry leader in the field of information technology. Prior to its acquisition by Oracle in January 2010, Sun Microsystems Inc. was a global fortune 100 company with a 26-year history of providing networking computing infrastructure solutions. For 15 years, Sun had a highly flexible work policy that allowed 19,000 employees to work away from the office at least one day per week. Bill Vass and his team selected and implemented the technology to support this highly effective virtual organization.

Elka Popova (EP): Hi Bill. You have a tremendous amount of experience in deploying advanced technologies to support Sun Microsystems’ transition to a more flexible work environment. I would like to hear your perspective on future technology trends.

In view of some key demographic shifts – growth of the virtual organization, consumerization of the enterprise, mobility, etc., what technology trends do you think will shape the market in 2011?

Bill Vass (BV): I think SaaS is going to continue to grow. I think there will be a lot of challenges in integrating SaaS, though. Consumerization will continue to grow as consumer devices penetrate the workplace. I think that will drive organizations to virtual desktops. So the idea would be – we don’t buy you clothing to come to work; we don’t buy you a car to come to work; why do we buy you a PC? I think that is the way it is going to move; and you just choose anything you want; we don’t care; when you are ready to work, we will give you a virtual desktop. That way we will keep our corporate data safe in the corporate cloud; and you can work on any device you want – you can work on your iPhone, or your Android phone, or your iPad, or your Mac, or your Dell Ubuntu box, or your HP Windows box, we don’t care.

Virtual desktop and understanding that environment is going to grow significantly. What you see happening with SaaS is very interesting. I was at a CIO conference with Fortune 100 CIOs. I asked them “How many of you are using SaaS today?” And 60% of them raised their hand. And then I asked them “How many of you, CIOs, selected those SaaS apps?” And no one raised their hand. And the reason is – just like with consumerization, where people are using their own devices, business leaders and users are selecting their own applications.

Picture this scenario. The business leader goes to the CIO and says ”I need this CRM system.” And the CIO says “Well, there are probably 1,100 interfaces on our CRM system. We will have to run it in a SAS70 data center; we will have to go through Sarbanes-Oxley; we will have to buy these additional products and install them and integrate them, and so on. Give me $13 million and 18 months and I will have it for you.” And the guy rolls his eyes and goes back to his office.

But then the salesforce.com sales person comes in and says “I can give you CRM right now, just give me your credit card. It’s only $25 an employee!” And the business leader gives them a credit card, and next thing you know, he’s got 5,000 people on salesforce.com. And then the same thing happens in HR; so then the HR system is on Workday. And then it happens in all these other places.

But then you have to manually type all this stuff people typed in salesforce.com into the Workday program, and into the ERP system, and the Order Management system. And the next thing you know, the business ends up hiring this huge staff to do this – for instance, type a new sales person’s information into all the systems, because these things are not integrated. And then the business leaders go back to the CIO and say “Hey can you automate this for me, just like it used to be?” And the CIO scratches his head and says “Oh, God, there are still 1,100 interfaces; you didn’t make these go away; you didn’t make the Sarbanes-Oxley requirement go away; you didn’t make the integration testing go away.”

I think there is going to be this time of chaos – SaaS chaos and revelation; immense growth of SaaS and immense growth of consumerization, and then a rationalization to virtual desktops, and a managed SaaS environment with integrations for SaaS.

You will also see lots and lots of companies putting up what I call private clouds, which is nothing more than continuing to do desktop virtualization and server virtualization, but with more automated provisioning.

I think you will see people waking up about closed wireless systems, and wondering why they are running these closed wireless systems, while they already have environments where people are working on unsecured wireless systems. And they will get the idea of having a wireless provider run it for them instead of them trying to run it themselves.

I think you will see pico cells being installed and replacing the desk phone altogether. Maybe you will see some more complicated phones at the receptionist’s desk, but for everybody else, who already has a cell phone, you will see pico cells which will improve reception and, now that you are not paying for wireless minutes while in their corporate buildings, you can also do it more economically than you did before. It becomes a very compelling option to give everyone a cell phone. And then you have the added advantage of letting everyone use their device, as long as you have a Web service environment, virtual desktop, and you can deliver an edge mail service.

You will start to see networks being turned inside out. But you will also see tons of companies doing it the old-fashioned way. There are companies still using mainframes, right? It’s not going to change overnight. You will have banks and governments who are very slow to change. And for good reasons around security and all those other things. But the real dichotomy you will run into is the competition between virtual enterprises and physical enterprises. It’s going to be staggering over the next few years.

In the end, the virtual enterprises will be so fast and flexible, and they will be able to run competitive rings around the “old fashioned” companies.  Not only will the virtual enterprises be more fast and flexible, they will have a much lower overhead of operation than the traditional way of providing IT services in big companies.  They will be able to expand and contract faster, get into new markets faster, and get the best talent from all over the world, without geographic limits.

EP: Bill, how strongly do you believe in cloud architectures? Do you think businesses will increasingly leverage external clouds? Which applications do you believe are best suited for the cloud?

BV: A lot of companies will be deploying private clouds, mostly virtualization with automated provisioning.  However, it’s important to note that these concepts are not new, IBM invented virtualization back in the late 60s and what we call cloud computing in the early 70s.  What we are seeing is just another cycle of centralization from decentralization but now on top of more open platforms.

The thing that will slow the movement to public and even private clouds will be the normal politics between different parts within large companies, but newer / smaller companies will not have these issues.

If I started a company today, I wouldn’t install any servers, I wouldn’t install any phone systems, I wouldn’t install any wireless systems. I would go to 802.11 service provider and have them run wireless APs in my office. I will have pico cells installed on the wireless  network and give everyone cell phones. I would go to Workday for my HR, and salesforce.com for CRM, and I’d build an IT environment that costs maybe about $2K a year per employee. The old-fashioned way, it cost about $17K a year per employee (business systems, plus network and hardware, and data-centers). So you will have a company with an overhead of $2K a year per employee competing with a company that has an overhead of $17K a year per employee. You have a company that can double its size in a day because of its virtual environment; it doesn’t have offices. And then you have a company that has this real-estate portfolio that’s slow to change. You are going to start to see these battles.

And the other thing that you are going to start to see is anxiety among the IT organizations about their jobs, and their place among all this. In a virtual company, the CIO is the same person who does real estate and who does purchasing. That’s a scary thing for CIOs; that’s a scary thing for the whole environment. That is also going to slow change and the adoption in the big companies.

The virtual companies will put everything in the cloud. They don’t have a legacy. Companies with a legacy will try to gradually move everything in the cloud, except their ERP systems. Mail, calendar, that will go faster – nobody is going to run those on the premises, that’s the dumbest thing in the world. Your web sites – why would you run that; just go to Amazon and have them run them for you.

I think desktop virtualization is going to go to the cloud; but most companies are going to run this internally, at first. I think you are going to see custom apps stay inside the premises, but commercial apps move to a more SaaS environments. I think the easiest stuff to move is the stuff that you don’t have to deal with Sarbanes-Oxley about. There are companies that legitimately have custom requirements, and companies that legitimately have security requirements that will prevent them from moving to SaaS. Those would be banks and governments, and other similar organizations. But even they should be delineating what they can take advantage of in the cloud. But they should also be careful about what they put in the cloud and make sure they don’t get locked in with a SaaS provider, and have an exit clause in contracts, and make sure they understand the SLAs properly.

EP: How about voice, Bill, corporate telephony? When will it get moved to SaaS on a large scale?

You know, the way I see things going, people would just put pico cells in their offices and use mobile phones. I think VoIP, beyond using it for Skype or something like that, might start to become one of those things where you ask yourself “Why did we even bother to develop something like that? We all have cell phones any way.” Why would you go and put in a bunch of Cisco VoIP phones in your company if you all have cell phones? What if you could reduce the cost and improve the quality by just putting in a bunch of pico cells?

EP: I think one big question on many customer and vendor minds is whether all-in-one solutions will eventually become more dominant. Currently, most businesses deploy best-of-breed architectures and this approach has both its advantages and disadvantages. Some vendors are making concerted efforts to become the one-stop shop for their customers’ communications needs. Where do you see the potential for this approach, especially in view of the SaaS and mobility trends you just talked about?

That’s what I referred to earlier as the chaos of SaaS that’s coming. What I described about the business users going and selecting SaaS on their own, outside of the organization, is going to continue and they will do it on the principle of best of breed. And then this giant chaos is going to occur, maybe 4 or 5 years from now, when we try to figure out how to integrate all the SaaS apps together into a best-of-breed environment.

The trouble with the all-in-one systems – old companies that have all-in-one systems are going to resist moving to SaaS. New companies, that don’t have anything, are going to move to SaaS right away.

I don’t think that any single SaaS provider is qualified to provide everything to a company. Certainly it’s simpler to get everything from the same company; but everyone who has had the experience knows how unpleasant it is when you are negotiating your next year’s support costs and there is no competition.

EP: When do you believe IT and telecom will fully merge – technologically, organizationally and in all other related aspects?

BV: One of the areas where I worked with Mitel a lot was this combination of the desktop and the phone. The challenge is that those two groups – the people who manage the desktop and the people who manage the phone – don’t talk to each other. And they are both threatened by each other. It is a people problem, not a technology problem. I think it is still going to be a long time before they merge, because they are two different camps internally and two different sets of vendors. I think what will cause them to merge is the younger generation coming in. They are already using Skype on their desktop, they are used to SIP-compliant VoIP on a desktop, and used to working on a cell phone. And those are the things that will drive the change; I don’t think organizations on their own are going to change.

EP: Bill, thank you very much for your insights. I think many CIOs as well as vendors and SaaS providers will appreciate your perspective on technology evolution.

 

 

 

Challenges Abound as the UC Channel Undergoes Transformation

01 Dec 2010

UC Channel Partner Challenges and Objectives
Most telecom VARs, SIs and consultants recognize the need to change and evolve along with their customers’ needs and architectures. However, transformation is a difficult process and requires a lot of support from the entire eco-system. As partners look to develop new skills and adjust their business models to become more competitive, they need a compelling vision and roadmap from their vendors, strong financial incentives, as well as clearly defined “rules of the road”. 

We surveyed 79 telecom and IT VARs, SIs and consultants. The goal was to identify partner challenges and objectives, as well as specific expectations for vendor support with customer and partner financial constraints, rapid technology evolution, and shifting vendor business models.

Unfortunately, only a little over 26% of channel respondents believe their vendors have been “most supportive” with the challenges presented by the recession and the technology trends taking place in the marketplace.

It is not surprising that our channel partner survey identified financial constraints and price pressures as the top challenges faced by telecom resellers and consultants in 2009. Some vendors were more successful than others in providing their channel and customers with compelling leasing programs and financial incentives to help with the adverse economic conditions. Close to 90% of partners indicated their top objective was stimulating demand through creative packaging and leasing programs, and 77% were looking to secure additional financing.

Furthermore, partners wish to receive greater support from their vendors in terms of lead sharing (76% of partners) and larger discounts (almost 55%). If vendors can step in with compelling channel incentives, they can ensure greater partner loyalty and help them weather the economic slump more successfully.

However, the survey revealed that partners are also facing challenges related to market structure and vendor relationships. Hosted and cloud services, competition from vendor direct sales, conflicts across channel tiers, and uncertainty about vendor viability and product roadmaps ranked high among partner challenges (between 40% and 60% of respondents).

As vendors look to grow their own market presence, extend customer reach, and diversify their delivery models they are aggressively expanding their channels and tapping into hosted/cloud services. These strategies can potentially be very effective for the respective vendors; however, they need to be properly executed, with clearly identified tiers of competition and roles within the evolving value chain. Competing for the same accounts through hosted services or direct sales will certainly alienate partners and may even confuse customers. Enabling VARs and SIs to deliver hosted or managed services can help create a more viable eco-system where vendors and partners benefit equally from the growing penetration of new delivery models.

UC, Virtualization and Cloud Technologies to Drive Transformation in the Channel
Going forward, as communications and IT become even more closely integrated, the market consolidates further, and UC technologies mature, channels will be increasingly important. The value chain will also evolve as vendors seek to reposition themselves to compete more successfully. Some will choose to become one-stop shops for applications and will leverage channel partners for implementation; others will find it more feasible to focus on niche application markets (e.g. contact center) but also deliver integration services in complex UC environments. Finally, cloud computing and cloud-based communications will gradually have a disruptive impact on the value chain, as vendors compete with their own VARs through service provider partners or hosted offerings delivered out of their own data centers.

Similar to in-house IT organizations, channel partners will experience a change in their roles, as they move from selling products to selling more complex solutions. Not only are channel partners tasked with helping enterprises through various technical challenges, but they also need to possess the business acumen to recommend a mix of resources that is most beneficial for the customer organization. For both businesses and partners, acquiring and/or developing the right talent will be key for success going forward.

Vendors and partners need to deploy a more consultative approach in marketing and selling next-generation communications solutions. Partners will need to help their customers address a series of important questions in deciding whether and/or how to deploy UC, virtualization or cloud architectures, such as the following:

  • What is the existing infrastructure - e.g. age, type (TDM or IP) and capabilities of installed voice and data equipment; what needs to be upgraded/replaced; how much is on the premises and how much is hosted, etc.?
  • Is the enterprise a multisite business?  Does it require a mix of on-premises telephony for some locations, and a cloud service for other? 
  • Should it plan for spikes in usage at certain times of the year?  What type of business is it (e.g. subject to seasonality, etc.)?
  • What is the user mix – in terms of geographical locations, mobility, use of communications, etc.?
  • How is the internal IT organization structured and what are its skills and capabilities?
  • What kind of advanced communications capabilities are required? Should the business consider deploying a collaboration platform?  Can their network support it? 

Partners must be able to address the technical needs of an organization based on its business needs.  Because there is so much choice for enterprises, partners need to be able to have the business conversation first in order to be able to deliver greater value to customers and gain a competitive advantage. 

Vertical Skills and Expertise to Help Partners Carve Out Competitive Niches
Demand for advanced technologies and UC varies by vertical. Financial services were hard hit by the recession, but generally are at the forefront of technology adoption. Healthcare, on the other hand, is a safe harbor during tough economic times. In addition to overall sensitivity to fluctuations in macroeconomic conditions, verticals also have some specific technology needs and preferences. For example, verticals with multiple, geographically dispersed locations (such as doctor’s offices, professional and financial services firms, and real-estate), as well government and education, typically prefer to outsource some or all of their communications and IT infrastructure and management and are therefore good candidates for hosted and managed services.

Healthcare, retail, manufacturing and hospitality, on the other hand, have traditionally offered the largest opportunities for indoor mobility. Most vertical industries have demand for specialized vertical apps – either customized off-the-shelf technologies or custom solutions built from scratch. The ability to develop such applications or integrate horizontal communications solutions with existing vertical-specific infrastructure or business processes (for CEBP) can provide channel partners with a competitive differentiator. As vendors spread their nets too thin, they will rely on partners to help them attack each vertical with a more customized approach and will seek out those VARs and SIs that have already developed relationships and expertise in specific verticals.

The SMB Market to Remain a Key Partner Domain
The more consolidated the marketplace and the more complex the new technologies and architectures become, the more difficult it is for vendors to successfully penetrate the fragmented SMB market on their own. Therefore, partners can continue to focus on developing competitive skills in that segment. They should seek to understand SMB investment criteria and work with the vendors to develop strategies that address these specific preferences. Local relationships and superior customer service will be key for partner success as they have little influence over other factors such as solution prices and features/capabilities. SMBs have traditionally received little attention from the vendors and the large SIs and VARs, which gives smaller local interconnects an opportunity to offer unique value. Rather than treating all SMBs with a cookie-cutter approach, they can take the time to understand their specific needs and use a more consultative approach in deploying and managing their communications  and IT infrastructure.

 

Avaya Desktop Video Device: To Be or Not To Be

17 Sep 2010

After reading a few commentaries on the Avaya video product launch on www.nojitter.com, I felt I should follow up on my post on www.sipthat.com of September 16. Mostly, I saw criticisms around the name of the Avaya Desktop Video Device. Also, analysts seem to be comparing its price and capabilities to tablet devices and, in this light, the Desktop Video Device appears to be at a disadvantage. There were also some criticisms about Avaya’s overall strategic focus and its (allegedly unfortunate) choice to launch a hardware device instead of a software solution.

I have to agree with my fellow analysts that there are some downsides to the way Avaya positioned the new product suite. For starters, the lengthy name of the “Avaya Desktop Video Device” is not going to create the kind of buzz a shorter and fancier name like CIUS or even its own Flare software could. In fact, I really liked the working name Mojo! A one-X derivative would have been good, too. But I disagree with how Avaya's new products are analyzed in isolation, disregarding their role within Avaya’s specific portfolio.

In my opinion, an end user should (and most likely will) be evaluating the entire Avaya architecture and vision, rather than making decisions based on a single device. Avaya’s SIP- and SOA-based Aura architecture provides the context within which its video strategy should be assessed. Avaya’s vision seems to be focused on delivering a comprehensive set of applications and end-to-end communications solutions that leverage existing, typically multi-vendor infrastructures within clients’ organizations.

As demand for videoconferencing grows, and mergers and acquisitions continuously change the landscape turning previous Avaya partners into future competitors, it seems prudent for Avaya to develop its own video solutions to gain a certain degree of independence and, certainly, create a new revenue opportunity as well. The bottom line here being – Avaya HAD TO develop its own video portfolio. For customers with existing Avaya infrastructure, an Avaya video solution is likely to help alleviate interoperability challenges and maybe significantly lower the cost of video implementation.

With Aura, however, Avaya aims to also be able to deliver its UC applications suite across multi-vendor core networking environments. Therefore, the potential for its video collaboration solutions is not limited to its own installed telephony base. In fact, the virtualized Collaboration Server can help it extend the reach of its application portfolio into both existing customers running older Avaya products and 3rd-party customers. It can front-end other telephony platforms and deliver advanced capabilities without having to rip and replace existing infrastructure.

Now is Avaya’s Desktop Video Device (Shall we abbreviate it to DVD or ADVD?) a tablet or is it not? Being larger and potentially more expensive that Cisco CIUS, how will it fare in the marketplace?

In my opinion, this question is only partially relevant. Yes, tablets are going to increasingly gain traction in the enterprise market and will complement or replace other communications endpoints. Most likely widely popular consumer tablets such as the iPad will be the first to penetrate the prosumer space with IT struggling to figure out if and how they should support such endpoints. Business-grade tablets, on the other hand, will take a while to evolve until they can serve a good number of business purposes besides communications. As noted in some other posts, we (business people) need to be able to take notes and store, edit and retrieve documents, spreadsheets and presentations, etc.

With that said, I would expect Avaya to continue to enhance and change its Desktop Video Device until it can confidently compete in the tablet space. In the meantime, however, it will need to ensure its Flare interface appears on as many already popular devices as possible – smartphones, other vendors’ tablets, etc. I agree with Melanie Turek (see her blog post here) that the Avaya Flare is indeed a very good interface and worth delivering on multiple hardware devices.

And as far as competition with Cisco is concerned, this is where I want to refer back to my previous point about customer choices being based on total infrastructure vision and roadmap, rather than individual devices. If a customer chooses Aura for its greater openness and flexibility compared with Cisco’s core infrastructure, for example, it is a moot point to compare the Desktop Video Device to the CIUS as they are not likely to tip the scales. Each of these devices will work best with the respective vendor’s own infrastructure. But it is a fact that, with its newly launched video suite, Avaya has now more to offer to its customers. If a customer is evaluating the two vendors on the comprehensiveness of their communications portfolios, Avaya is now much better positioned to compete with Cisco than it was before.

In her blog post, Melanie stated that Avaya should have focused on software instead of hardware. While she is making some valid points, the truth of the matter is, purpose-built devices are frequently best of breed, especially in highly demanding environments. Yes, I do want to see Flare on PCs and laptops, desktop IP phones and selected smartphones as soon as possible, but the Desktop Video Device serves a specific purpose. From an integration, performance, security and control points of view, the Desktop Video Device is a better starting point and a more appropriate proof of concept than any third-party smartphone or tablet. The touch-screen technology gives it an advantage to IP desktop phones; the larger form factor makes it more appealing for professional video than most smartphones; and with a separate audio path, it is a much more reliable endpoint for real-time communications than the PC or laptop.

Overall, I think Avaya’s new video suite can be quite successful if properly positioned among potential customers. But it needs to evolve to capture larger opportunities and address broader customer needs.

I would love to hear from some end users and channel partners. It is interesting to know how they perceive the new Avaya product suite and how it compares to other video solutions they have evaluated.

SIP Trunking - Has it Reached Prime Time?

15 Apr 2010

Subha Rama, and Industry Analyst with the Unified Communications & Collaboration team, recently completed a study on North American VoIP Access and SIP Trunking Services Markets. She shares some of her findings here:

In order to reach critical mass, SIP trunking needs commitment from both incumbent carriers and CLECs. Here is an insight on some of the key challenges faced by service providers in promoting SIP trunking services more aggressively among their customer segments.

Market watchers have been predicting the downfall of the PSTN for several years now. A close look at the balance sheets of service providers shows a steady decline in their voice revenues and continuous erosion in their voice ARPU (average revenue per user).  However, contrary to the predictions, the PSTN is still surviving, challenging the growth and pervasive adoption of IP-based technologies such as SIP trunking.

SIP trunking has been around since 2004, though it was not until 2009 when it took off in earnest (see Frost & Sullivan study, North American VoIP Access and SIP Trunking Services Markets, 2009). So why were enterprises shying away from mass adoption of a technology that promised a number of benefits, including consolidation of trunks and voice platforms, lower toll costs for long-distance and DID, centralized management and administration, self-service and overall better return on investments?

To SIP or Not to SIP?

The transition to IP has been faster in some geographies than in others, largely because it is dependent on the level of service provider commitment in terms of technology implementation and service promotion. Incumbents with substantial Class 5 infrastructure have been slow to acknowledge the relevance of IP-based services, so much so that SIP trunking has for long been considered a forte of alternative providers. Though SIP allows easy, rapid and inexpensive deployment of new services, large incumbents and nationwide carriers are finding that these new services are difficult to globalize and scale to the levels they require. 

Competitive local exchange carriers (CLECs) were quick to acknowledge the untapped potential of SIP and have started offering these services aggressively to both large enterprises and small and medium businesses (SMBs), traditionally a challenging market for large national carriers.
 
The SIP Business Case for Service Providers

SIP trunking offers a compelling business case for service providers in the long term, though in the initial years of deployment, telcos may face higher network costs and lower returns. Packetized technologies such as SIP and H.323 signaling protocols have the potential to reduce both CAPEX and OPEX through centralized application management and reduction in the number of media processing and application server platforms and local points of presence. Though there is a sound business case for migrating from legacy infrastructure to newer IP platforms, the differentiators are less powerful when migrating from an H.323 IP platform to a SIP platform. Value propositions get narrower in such scenarios, though SIP providers are touting presence-based services to drive home their business case.

However, the TDM-to-SIP migration offers a number of benefits from a service provider perspective:

• New multimedia, converged services that can be rapidly deployed
• Enhancement of existing services, as SIP allows the use of TCP-IP syntax and scripting technologies for voice
• Integration with a growing number of economical SIP-enabled endpoints
• Cost savings not limited to just transmission, but to the overall service provider environment that includ

Vendor Approach

Though all telephony vendors have a SIP story to tell, not all of them support end-to-end interconnectivity between SIP endpoints. A number of vendors still sell equipment with proprietary protocols, including Cisco’s Skinny protocol, Siemens’ CorNet-IP (an add-on to H.323), and Mitel’s MiNet.  Unified Communications (UC) vendors have, however, also launched products with native SIP call control, offering a UC core with end-to-end SIP message routing. Microsoft is certifying SIP trunking service providers for offering SIP interconnects to its Office Communications Server (OCS).

None of the service providers rely solely on SIPConnect Forum certifications for ensuring interoperability. Instead, many of them have started offering remote testing facilities and on-site testing through agents to ensure compatibility with different vendor equipment. However, many of these programs are not comprehensive, nor do they include tier-2 telephony vendors that are more entrenched in the SMB space.

 
Conclusion

Despite the challenges, all service providers acknowledge that SIP trunking can drive a more sustainable business model since they are constantly challenged to stem the erosion in their voice ARPU and consequently declining revenues. Though incumbents have been late to embrace this technology, they are well-positioned to exploit the full potential of SIP trunking given their extensive footprint, which allows them to offer these services nationwide.

 

Tools

Help Desk

Full list of offices


For more information and general enquiries, contact Frost & Sullivan near you.

North America
tel: +1.877.463.7678

Select a location near you..