SHARE



ABOUT THE AUTHOR


Blair Pleasant
Blair Pleasant is President & Principal Analyst of COMMfusion LLC and a co-founder of UCStrategies. She provides consulting and market...
Read Full Bio >>
SHARE



Blair Pleasant | August 05, 2014 |

 
   

Where's the REAL Value of the Cloud?

Where's the REAL Value of the Cloud? I always encourage customers to look beyond the TCO numbers to other key factors that show the value of cloud solutions.

I always encourage customers to look beyond the TCO numbers to other key factors that show the value of cloud solutions.

I don't have a conversation with a customer or vendor these days that doesn't involve the cloud. I'm still amazed at how many of these discussions focus around the cost differences of cloud and premises-based solutions.

When discussing the benefits of the cloud, the first argument that usually comes up is the financial model. When speaking with vendors, the typical number-one benefit of the cloud is the subscription model and replacement of up-front capital expenses (capex) with ongoing operating expenses (opex), which they claim that CFOs prefer.

Really? There are so many more important benefits of the cloud rather than the payment model. In fact, I expect the opex vs capex argument to disappear in the near future, as some vendors are turning to subscription-based pricing for their premises-based UC offerings in order to meet customer preferences for this payment model.

The financial aspect of UC solutions is certainly top-of-mind for most organizations. In the past six months I've been giving many presentations to SMBs and mid-sized organizations discussing why they should consider moving to unified communications as a service (UCaaS), and during or after each presentation I'm usually asked about the total cost of ownership (TCO) of cloud versus premises-based solutions.

I could point to studies and papers claiming that cloud-based solutions have a lower TCO, and other studies that give the advantage to premises-based solutions. According to an analysis that Phil Edholm and I prepared on a hypothetical 300-person company as part of the UCStrategies UC Benefits and ROI Tool, the overall six-year TCO is lower for cloud-based UC. Other studies that have been presented at Enterprise Connect and elsewhere show that premises-based UC solutions end up having a lower TCO than cloud-based services after only three years. Clearly, there is no one right answer.

I always encourage customers to look beyond the TCO numbers to other key factors that show the value of cloud solutions. For SMBs and mid-sized companies without large IT staffs, UCaaS (UC as a Service or cloud-based UC) should be a "no brainer." Smaller organizations don't have to worry about having the resources to manage and maintain a premises-based solution, and can focus on other things. Businesses with multiple locations don't need dedicated IT professionals at each site.

When trying to determine whether UCaaS or premises-based UC is right for you, there are many things to consider. The oft-touted benefits to cloud-based UC solutions include:

Flexibility: Cloud-based UC offers more flexibility, as companies only pay for the services needed for the end users on the system, and the services can easily scale up or down as needed. In some cases, customers can subscribe to cloud-based services on a feature-by-feature basis and avoid paying license fees for unused features. They can try the service and get their feet wet, and then add more users and locations when they're ready. However, much of this depends on the terms of the UCaaS contracts.

Simplicity: Cloud services are much simpler for organizations to deploy, manage, maintain, and upgrade than premises-based solutions, which can be somewhat complex. This can and should be measured by properly assigning the staffing costs in the TCO analysis.

Speed of Deployment: Cloud services can be up and running quickly and easily, without having to install and configure servers.

Business Continuity: Redundancy and disaster recovery are delivered by the service provider, which includes elements such as backup power, site redundancy and high-capacity bandwidth connectivity--reducing downtime in emergency situations. As long as employees can access a mobile phone or the Internet, they can be in business, even in the case of natural disasters or situations where they can't get to the office.

Technology refresh and updates: Companies avoid the cost of technology refreshes, as they automatically get the latest versions, saving time and money.

Reduced Risk: UCaaS reduces the risk of technology obsolescence and other issues, as well as offering a lower risk to get started.

There are downsides to the cloud as well. Companies in heavily-regulated industries such as health care and financial services are wary of cloud-based services that may not provide the security and control needed and may not meet all the compliance requirements. For companies that require a good deal of customization for their specific needs, premises-based solutions may win out. With cloud-based UC, your business communications are dependent on the reliability of your Internet connection, and when it's offline, you're offline.

Which Approach Has the Advantage?

Source: COMMfusion 2014

I've spoken with companies that swear they'll never move to the cloud because of security issues, and some that will never go back to a premises-based solution because they don't want the hassle of managing and maintaining the solution. It's essential to look at your organization's specific requirements and goals before selecting the deployment model that is best suited for your individual needs. Cloud-based UC services are getting all the buzz for many reasons, but if you move in this direction, make sure you're doing it for the right reasons.

Follow Blair Pleasant on Twitter and Google+!
@blairplez
Blair Pleasant on Google+





COMMENTS



Enterprise Connect Orlando 2017
March 27-30 | Orlando, FL
Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Special Offer - Save $200 Off Advance Rates

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

April 5, 2017

Its no secret that the cloud offers significant benefits to enterprises - including cost reduction, scalability, higher efficiency, and more flexibility. If your phone system and contact center are

March 22, 2017

As today's competitive business environments push workforces into overdrive, many enterprises are seeking ways of streamlining workflows while optimizing productivity, business agility, and speed.

March 8, 2017

Enterprise IT's ability to innovate is critical to the success of the business -- 80% of CIOs agree. But the CIO role has never been more challenging than it is today, with rising operational respo

March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.