Summer's winding down, which for us means that Enterprise Connect Orlando planning is gearing up. Our next event, EC Orlando 2015, will mark the show's 25th anniversary, a milestone that makes us pretty proud. A lot has changed over the last 25 years, but it seems obvious that the next 25 years will see even more extreme change.
One of the mega-trends that everyone expects will be a key component of that change is the Cloud. There's no question that public cloud services like Amazon Web Services are driving a revolution in pricing, creating economics that IT shops are finding it hard to resist. It's equally clear that cloud-based communications services--from a range of provider deployment models--are growing. This Frost & Sullivan data supplied by Melanie Turek is just one recent example. It's noteworthy, though, that even as Frost projects 30% annual growth for UCaaS, they also recognize that this market is likely to continue to be dominated by SMBs.
We saw the same thing in data that was recently released by Mitel about its cloud services business. In 2Q14, Mitel's cloud services business grew 75% Y/Y and 21% Q/Q in terms of total seats, which by any measure is very impressive growth. However, the numbers also make it clear that this is very much a small-market play; the average number of seats per customer is just 34, up from 32 a year earlier.
Indeed, when you step back and look at long-term projections for the hosted/UCaaS market, most show an overall penetration rate not much higher than that of Centrex during its heyday: 10%-15% of the total enterprise communications market. So someone needs to tell us how the supposedly unstoppable trend of Cloud for broader enterprise IT meshes with projections for relatively minor cloud adoption in the large enterprise for communications.
One likely explanation is that while IT is hot for the Cloud, and everyone from the CIO on down wants to outsource as much as they can to the Cloud, this is very much a piecemeal process. Have you heard of any large enterprises shuttering their datacenter and just moving the whole shebang to a public cloud platform, or even hosting all their applications on a service provider's datacenter? I haven't. So sure, if your enterprise had decided on so a radical move as to get rid of its datacenter altogether, you'd need to find a new home for your communications systems. But that's not what's happening now--and frankly I'll be pretty surprised if it ever does happen.
Fred and I think it's time for a debate on the Cloud for enterprise communications--we're talking large enterprise, completely (or almost completely) outsourced hosting. We'd like to see advocates from the vendor community debate this issue, but to be honest, we're struggling to think of a vendor who'd argue that Cloud isn't the right play for large enterprises. As best as we can read the market, no vendor wants to be seen as opposing the Cloud or as not having a Cloud story.
Am I wrong about that? Who out there would make the case that large enterprises shouldn't look to the Cloud as their long-term strategy for deploying communications applications?
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