By all accounts, cloud communications is where it's at. Yes, many companies still maintain -- and will for some time -- on-premises telephony systems and UC platforms. But even if a company isn't ready to make the move, I'll wager that cloud conversations chew up quite a lot of time in any forward-looking strategy discussions. That is, unless IT and business leaders refuse to take their heads out of the sand.
We know this through conversing with enterprise IT professionals as well as gathering insight from industry consultants and analysts. But the numbers track the cloud's rise, too. The latest come from market intelligence firm IHS Markit, which earlier this month released its 2016 Business Cloud VoIP and UC Services Annual Market Report and shared highlights in a research note issued just last week. Worldwide cloud PBX and UC revenue totaled $4.7 billion in the first half of the year, up 12% from a year ago, while the number of hosted VoIP and UC seats increased 22% year-over-year in H1 2016, to 38 million. That number should reach 74 million by 2020, according to IHS Markit data.
Report author Diane Myers, a senior research director at IHS Markit, provided the upshot in today's research note: "Hosted PBX and UC service is a growth market that has moved well beyond the early stages. Growth in this space is a reflection of the increased adoption of cloud services by businesses and a broader availability of solutions from a wide variety of providers, including PBX and UC vendors," she wrote.
Ah yes, "creating stickiness" -- there certainly is a lot of that going on. I'm not sure why, but whenever I hear that phrase, flypaper comes to mind. The visualization isn't pleasant, but it does capture the idea -- once a customer has landed on a particular cloud communications service, the provider certainly doesn't want it flying off to another. Hopefully, its efforts to keep the customer satisfied is a good thing -- just like the fly that's just landed in a gooey mess, no customer wants to feel stuck with no way to wiggle free from a bad experience.
Another way to think about what providers need to do to bolster demand for their cloud communications services comes from Matt McGinnis, AVP of product marketing at UCaaS provider RingCentral. He talks about the need to "alleviate enterprise resistance."
RingCentral's latest effort to lower an enterprise's reticence to migrating their communications capabilities from on-premises systems to cloud platforms comes in a direct interconnection option for sites with 250 or more users, released earlier this week (see related No Jitter post, "RingCentral Adds Direct-to-Cloud Access Ramp"). Think about direct interconnection -- from your MPLS network, for example, right into the RingCentral cloud platform -- as a new twist on hybrid, he suggested.
"If we can extend the cloud down as close as possible to the customer, then we can take out some of the concerns of removing those premises legacy PBXs from their closets and putting that functionality in the cloud," he said. Rather than sending mission-critical voice packets over the wild unknown of public Internet routes, enterprises can use direct interconnections that deliver the security, availability, and uptime that type of network traffic warrants.
Why build a private communications cloud, which means managing a lot of boxes as well as the "N squared problem of interconnections between different offices?" McGinnis asked, rhetorically, of course. Instead, he suggested, you should "take advantage of what IP networking, Layer 2 MPLS, and cloud being at your doorstep can really offer your business."
As McGinnis himself admitted, the term "hybrid" has been "repurposed 100 different ways" in this industry. But private connections into a cloud communications platform, a la what RingCentral offers with its new CloudConnect option and similar to what Microsoft offers to Skype for Business Online users with Azure ExpressRoute, for example -- make for a nice way to think about hybrid cloud.