Cloud Is Winning... But Bet on a Tortoise's Race
The majority of business telephony users will continue to be served from premises systems for many years to come.
As the cloud model in general becomes an increasingly viable -- and appealing -- architectural choice for enterprise communications, the leap from the premises to the cloud grows shorter for companies considering how to move forward with critical communications capabilities, be those for the customer-facing contact center or the internal needs of a busy workforce.
But has the cloud won, as UCaaS provider RingCentral proclaimed in a full-page Wall Street Journal ad placed in the wake of the Avaya bankruptcy?
I posed that question to Elka Popova, program director and senior fellow with Frost & Sullivan, during last week's episode of the newly launched No Jitter On Air podcast. Popova, who will be delivering a UCaaS market overview at Enterprise Connect next month, knows this market inside and out, after all.
So, has the cloud won? Not exactly, Popova said. It hasn't won, but "cloud is winning."
You can see this in the decline of licenses for PBX lines and the rise of the UCaaS installed base, which is growing annually by double digits -- in the 20s or 30s, depending on region and year, Popova said. "We can expect this trend to continue, but we are in the early stages and we will continue to see a lot of businesses that still see value in keeping their investments on the premises."
In other words, this is a tortoise's race that will unfold over many decades, she added. Companies have legitimate reasons to keep their UC systems on premises. These include the significant factors of reliability, security, customization and integration, and total cost of ownership. "You just don't throw out a system that's meeting most of your requirements just to move to the cloud for future benefits," she reminded No Jitter On Air listeners.
Caution prevails particularly in the large enterprise segment, where UCaaS penetration is "still fairly limited," Popova said.
Rather than leaping into UCaaS, large enterprises still tend to favor a private cloud model in which they commission a service provider to host their UC instances on dedicated servers. And when they do loosen up, they start small -- using UCaaS at a few branch offices or smaller sites -- and gradually, over a period of several years, move the entire workforce to UCaaS solutions, Popova told listeners. Of course this evolutionary path will be familiar to anyone who has tracked the progress of many enterprise applications from the premises to the cloud.
When a large enterprise begins looking to serve the entire organization from the same cloud infrastructure, "certain criteria becomes tremendously important," Popova added. The above-mentioned factors are in the mix, as well as breadth of feature set; flexibility in deployment options (not every user is going to need the exact same set of services); geographic reach and local presence globally; and centralized management, for example.
Even if starting small, a large enterprise ought to think of such future requirements when beginning to evaluate UCaaS options. Popova said she counts in the ballpark of 120 UCaaS providers in North America alone. Certainly, applying such criteria will help narrow the list! As she advised, UCaaS providers that can meet this list of requirements are the ones best-suited for large enterprise implementations.
Tune in to No Jitter On Air to hear more of Popova's high-level perspective on the UCaaS market, and join her at Enterprise Connect for a deep dive in the session, "Where Is the UCaaS Industry Headed?" And if you haven't yet registered for Enterprise Connect, taking place in Orlando, Fla., March 27 to 30, do so now using the code NOJITTER to receive $300 off an Entire Event pass or a free Expo Plus pass.