Cisco has taken a positive step to make their voice and UC licensing simpler and easier to understand.
...call processing function has been transformed over the years. Most of the intelligence for call processing now lies in the software component of the call-control solution. R&D, entrepreneurial endeavor, and innovation are also shifting to the software side. With creative energies expended to the software, the approach to pricing has logically evolved toward device licensing.
--Cisco UCM Licensing Pricing Model Q&A document (2007)
Fast forward to 2010.
It’s no surprise that today more than ever the "engine" for IP Telephony, unified communications/collaboration, and SIP-enabled sessions is software, not hardware components. When you consider current trends of virtualization and virtual desktop infrastructure, the importance of software is even greater.
As a result, software and related licensing costs (and costs for support, upgrade subscriptions, and professional services to implement software solutions) have become increasingly important to understand in order for organizations to make informed buying decisions.
This article discusses a major change Cisco just announced last month (February 2010) regarding their Voice and Unified Communications software licensing. Existing and potential Cisco customers will need to understand this new software licensing model and factor it into their analysis as they consider proposed UCM solutions.
One recent article on another website described this announcement as: "Cisco Tweaks UC Licensing Model." Tweaks? Hardly. We’re talking about a major overhaul of the Cisco licensing model used for a vast majority of their UCM and other voice/UC sales.
So what is Cisco doing? The short answer is that they're replacing Unified Communication Manager (UCM) Device License Unit (DLU) software licensing and UCM server license fees with new "User Connect Licensing" (UCL). The UCL model is also being applied to Unity, Unity Connection, and other voice and unified communication products--and with it, these server licenses also go away.
So goodbye DLU and hello UCL. Kind of.
Some History of Cisco IPT and UC Software Licensing
A little background may be helpful. Device License Unit pricing was created in 1998 and is Cisco's original software licensing model designed for their CallManager and UCM product portfolios.
Figure 1 below illustrates Cisco's development of IP Telephony/UC software licensing since its acquisition of Selsius Systems in November 1998 and forceful entry into the enterprise voice communications market.
With the DLU model, software licenses are required for Cisco and 3rd party IP telephony devices connected to Cisco telephony servers. These licenses are sold in increments defined as "device-license units." With DLU pricing, keep in mind that a server right-to-use (RTU) fee is also required.
Each device is assigned a unit quantity based on the type and capabilities of the device. Devices with more complex and high-end capabilities are assigned a higher number of units compared to devices with basic capabilities.
The list price for one Device License Unit is $50 (USD). The following table shows various DLU values and costs for a variety of devices:
Note that "cheaper" third-party SIP phones also require a Cisco software license. Punchline: Don't think Cisco (or any other manufacturer) is going to let you put some other company's "plastic" on the desktop for free.
Again in addition to DLU fees, you pay a one-time (perpetual) RTU license fee for each server/server application installed.
Cisco's Unified Workspace Licensing (CUWL) Software Model
With emerging Unified Communication applications being developed in the mid-2000s, a new licensing approach was needed. Cisco’s response was the creation of its Unified Workspace Licensing (CUWL) software in 2007, having taken ~18 months to bring to market.
CUWL "bundles" various UCM, Unity, Contact Center, conferencing, and other collaboration applications in one of four different editions (Entry, Business, Standard, and Professional).
Each CUWL license has a one-time fee ranging from $245 for Entry Edition up to $500 for Professional Edition (which now includes a 3-year WebEx subscription). With CUWL, Cisco’s Essential Operate (ESW) service and a 3-year Unified Communications Software Subscription (UCSS) service agreement are required. SmartNet maintenance support for hardware products is optional.
A more detailed discussion of CUWL and the recent changes announced by Cisco to this model is beyond the scope of this article. I'll present a more in-depth analysis of CUWL in another No Jitter article and during my VoiceCon session on IP Telephony and UC Software Licensing and Pricing on March 24.
So Why User Connect Licensing Now?
Currently, most Cisco UCM deals are done using the older DLU software license model. However, DLU + server right-to-use pricing is seen by Cisco as no longer relevant given technology trends and market conditions.
Specifically, Cisco's perspective is that DLU+Server licensing is device-centric (which it is); today's market requires a more user-centric licensing model consistent with SIP-enabled communications, which is all about establishing device-independent connections between people. I agree. The market is also looking for simpler models that customers and the indirect channel partners can easily understand. I couldn’t agree more.
So with user-centric communications and simpler software licensing in mind, Cisco has announced User Connect Licensing last month.
UCL Highlights
Unlike Device License Units, the new UCL applies to UCM, Unity, Unity Connection, UCC Express, MeetingPlace, and other Cisco Voice and Unified Communications products. However, with most software licensing models in the industry, there are exceptions, and that fact applies to UCL as well. For example, UCL will not be available with UCC Enterprise, Unified MeetingPlace Express, and Unity Express.
Other highlights:
* No more server licenses. UCL includes both the user and server RTU license.
* License costs are one-time (perpetual) right-to-use fee.
* Effective with UCM Version 7.1.5 and higher only UCL can be used. Using DLU pricing with UCM 7.1.5 or 8.0 is not an option.
* Same policy applies to other UCL-eligible products beginning with Version 8.0. For example, with Unity Connection 8.0, only UCL can be used unless the customer is buying messaging with CUWL.
* For UCM, there are five UCL user types:
Note: All license fees are mfg list (US$).
* Pricing examples for DLU vs. UCL comparison:
1. Assuming a 7911G Cisco phone and Unity Connection mail box on a 300 user UCM system:
--DLU Model: $245 ($150 DLU+ $65 Unity License + UCM/Unity server licenses ~$30/user)
--UCL Model: $200 (Basic UCL + Unity Connection; server licenses included)
2. Assuming a 7960G Cisco phone, Unity Connection mail box on a 300 user UCM system:
--DLU Model: $295 ($200 DLU+ $65 Unity License + UCM/Unity server licenses ~$30/user)
--UCL Model: $285 (Enhanced UCL + Unity Connection; server licenses included)
Note: At $40/user more ($325) CUWL Standard Edition would include Presence & Cisco Soft Client.
* Unity: $100 per mail box with unlimited ports
* Unity Connection: $75 per mail box with unlimited ports
* Cisco Unified "Express" products are not entitled to UCL pricing
* Mix of CUWL + UCL licenses in the same cluster is allowed but will require ESW and UCSS contracts for all users on that cluster
Conclusion
DLU pricing is not officially "dead" and won't be for awhile. DLU licenses will still be available with older UCM releases until these systems are End of Sale (EOS).
With its release in February 2010, UCL must be used beginning with UCM 7.1.5. For other Cisco voice/UC systems, UCL is used beginning with Version 8.0. With UCL, customers won’t have to think about UCM server licenses or Unity VM/MM session licenses. They're gone.
For the foreseeable future, Cisco's customers (and sales teams) will need to understand three markedly different software licensing models for voice and UC products; DLU; UCL; CUWL. As such, Cisco will be challenged with the task of communicating just how UCL works in relation to DLU and CUWL in order to minimize market confusion.
Bottom Line--The new UCM UCL model looks to be either less expensive or cost neutral when compared with the old DLU model. For the majority of users with IP or SIP devices, UCL will be cheaper. Analog device licenses are much less expensive as are adjunct licenses for users with more than 1 device.
On face value, messaging costs for Unity and Unity Connection user licensing are higher. But again, once server licenses are factored in, the overall user costs appear to be generally lower or in some cases only modestly higher. As always, customers will need to do their financial due diligence to understand the actual cost impacts.
In addition, potential Cisco customers will also need to assess their current and future UC requirements to determine if UCL or CUWL makes the most sense. Keep in mind that if you buy UCL today and want to upgrade to CUWL later, you'll pay a license upgrade fee to do it (the upgrade fee is the cost difference between the UCL and CUWL licenses with the same discounts applied at time of original purchase).
In conclusion, creating a universal model that covers all products, makes financial sense, and is easily understood is no easy feat. Actually, for companies with deep and diverse product portfolios like Cisco, I think it's impossible.
Make no mistake--good software licensing models need to be flexible to accommodate new products and adjust as older technology retires (I would like to see UCL include the Express and UCC Enterprise products).
While there is still work to do, I believe Cisco has taken a positive step to make their voice and UC licensing simpler, easier to understand, and is clearly going in the right direction with User Connect Licensing.
Douglas Carolus, MBA is Director, Communication Solutions for N’compass Solutions, an independent IT/communications technology consulting firm located in Minneapolis, MN where today's low temperature was a balmy -8°F.
