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Do You See What I See Shaping UC? Part 2

6) The Impact of Free
Wainhouse Research has studied the conferencing and collaboration market for over a decade. In the figure below, we make a point about the impact of free by illustrating the percentage of conferencing users who use various Web conferencing solutions.

Figure 3. Web conferencing platform usage among end users as of 12/2008

The stunning statistic highlighted by the black arrow is the number of people still using Microsoft NetMeeting as their conferencing platform. At the end of 2008, NetMeeting ranked fourth after WebEx, Live Meeting, and "Other." The "Other" category includes a variety of conferencing solutions; consequently, NetMeeting would actually rank as the third most regularly used Web conferencing platform in the world! This is in spite of the fact that Microsoft no longer supports NetMeeting and has not supported it since NetMeeting 3.01 shipped in 2004.

The point we make is that free tools, if they provide adequate functionality, resonate with the market and influence the market long after the vendors may wish the tool’s influence would wane. As a case in point for the UC market, consider presence and IM engines. We would submit that presence and IM have been declared as free commodities given the number of places one can go to get a free client: Microsoft Live, Yahoo!, AOL, Google, Skype, etc. We believe that vendors who want to charge for a presence and IM solution UC element will be disappointed in sales because these capabilities are so readily available for free. One exception might be IBM Sametime, which still has a sizeable base paying for licenses.

Why might a company consider paying for presence/IM when they can get it for free? There are a few reasons, and they will revolve mostly around identity and control. With a premises-based presence/IM engine, the company can specify what a user's IM name shall be; this gives the user an identity associated with the company, and it gives the company control (and an archive) over unorthodox, or frankly goofy, IM names and messages. The company can also control who the user engages in IM conversations as well as control the content and archival capability of the IM messages by using IM hygiene software. We note, however, that there are IM hygiene solutions that work with the free, public presence/IM clients as well, so the control issue is a bit more moot than the identity issue.

There will be some instances where a company will need the presence engine integrated with the user’s calendar, phone, or some location-based service. For companies requiring these more robust presence capabilities, the free presence/IM solutions are clearly not adequate. However, we believe this is the exception rather than the rule: the majority of presence/IM users will get along fine if an IM system has only computer presence. Even if there is phone presence, calendar presence, and location presence, a common courtesy is to send an IM asking if the other person is there and can chat or speak by phone; hence, while the context a person is working in is sometimes helpful, many people still ask for permission to disturb before commencing a communications session.

Therefore, our belief is that enterprises will generally not pay for the presence/IM elements of a UC solution since these capabilities can generally be obtained for free. One can look at the data in Figure 2 (see Part 1 of this article) to see that companies are clearly not paying for UC clients made by the telephony vendors.

Along with presence/IM, we also postulate that desktop video is free. Microsoft made it free beginning with NetMeeting, and the tradition of free desktop video continues on with Skype, Google, Yahoo!, AOL, and a host of others. Like presence/IM, we believe user companies will generally not pay for desktop video. Over the past 10 years, we have seen a zillion desktop video companies enter and then exit the market simply because there is no money in desktop video. Some entrepreneurs and venture capitalists believe that the advent of scalable video coding (SVC), with its higher quality, will be the breakthrough that will make desktop video profitable. Our experience suggests that SVC video is an incremental improvement that will ultimately show up in the free desktop video solutions (Google’s video chat already has SVC technology).

What other UC elements are free? Voice has been free for a long time, thanks primarily to Skype. However, good voice has typically not been free. This too may be changing if the article by John Malone in NoJitter is correct which states that approximately 18% of the PBX market is open source. Furthermore, business quality voice has been compromised due to lower MOS scores on business calls made using mobile phones. Because voice is so important, our belief is that people will continue to pay for it; however, we expect to see more free voice deployments and the cost for paid deployments (read PBXs) to fall significantly, particularly when OCS 2010 comes online with remote survivability and E-911 capabilities.

Another free UC capability is email. While most of us have email through our employers, most of us also have free email accounts through Google, Yahoo!, and others. Companies pay for email primarily to have an identity. It looks a lot more professional for my email to be from than from Gmail or Hotmail. Plus, one can avoid the tiresome blinking ads that come with free email services. Clearly there are some control and hygiene components in an enterprise email solution that one does not get with a free email solution. However, the value is primarily in the identity a paid email solution provides.

So, which UC elements will enterprises pay for? Well, they still pay for the PBX with good voice quality, but the cost for PBXs is clearly on the decline. They will pay for good executive, group, and telepresence video solutions. They will pay for audio and Web conferencing although Web conferencing is often bundled with audio conferencing at a very low cost. They will pay for shared workspaces and enterprise email solutions. They will pay for mobility. There are a lot of UC elements companies will and are paying for. Our objective in this section was to point out that companies are generally not paying a lot for UC clients nor are they paying for desktop video.

7) UC and Virtualization
As companies and service providers look for ways to reduce costs, virtualization is a topic that frequently emerges. Virtualization is a new area being looked at by UC vendors as well as some forward thinking service providers and end users.

When it comes to virtualization, the data elements of a UC solution can be readily virtualized, but the real-time elements cannot--yet. The data elements include the presence/IM engine, email/calendaring servers, shared workspace servers, and so forth. These are the non-real-time elements in a UC solution.

However, the real-time UC elements, primarily voice and video, are much more difficult to virtualize. This is because a virtual environment can add latency and jitter to the time-sensitive media flows on which IP voice and video rely.

Microsoft has stated that the data elements of Office Communications Server can be virtualized; however, if a company wants to use OCS’s Enterprise Voice capabilities (effectively, Microsoft’s PBX replacement), Microsoft recommends it should not run OCS in a virtual environment. However, we are aware of companies that are running OCS in a virtual environment, with full voice and video capabilities enabled, who have reported no issues.

Siemens is also experimenting with virtualization by running Siemens’ OpenScape Server and OpenScape Voice in the Amazon EC2 cloud. However this was only debuted in prototype form last spring, at VoiceCon Orlando 2009, and so we cannot comment on how well it works in real-world implementations yet.

Finally, Mitel made an announcement along with VMware that the Mitel 3300 software will run in the next version of VMware's virtual environment, which will be available near the end of 2009. VMware and Mitel have been working on voice virtualization for some time. The breakthrough, according to VMware, is that in a multiprocessor environment, one of the processors is configured specifically to handle all input/output for all of the other processors, which removes the latency/jitter issue for voice. We cannot comment technically on whether this change in VMware will truly allow virtual UC environments with real-time media, but we believe virtualization is a technology UC can and should take advantage of. This leads us to the topic of unified communications as a service (UCaaS).

8) The Future of UCaaS
Wainhouse Research recently released a report on unified communications as a service. One of the surprising results is that among companies selling a full UC as a Service offering, growth is in the double digit range, in spite of the U.S. and world economy doldrums. Right now, most suppliers with an offering are running the voice components on dedicated hardware either hosted in their own data center or in a hybrid fashion--some UC elements hosted and some located on the customer’s premises.

This is where virtualization gets really interesting for unified communications. With Microsoft, IBM, Cisco, and others entering the hosted communications and collaboration markets, virtualized UC environments are a must in order for these hosted offerings to scale and to be successful. Presently, Microsoft Online will host only the data elements of a UC solution, and the Microsoft Azure Cloud does not support real-time media. This must and will change as competitive offerings from VMware and others begin supporting real-time media flows.

Hosted UC services have a high cost relative to premises-based solutions; a rigorous calculation of hosted services costs versus premises-based UC costs is contained in our report. Clearly the growth drivers for this market are much more than cost alone. The bottom line is that we are quite bullish on hosted UC services, and we believe they will play a significant role in UC’s future.

Figure 4. Worldwide unified communications as a service market forecast

9) Where UC is Headed
We can’t help but recall the heady days of artificial intelligence (AI) programming back in the late '80s/early '90s. At the time, there were predictions that artificially intelligent programs would take over the roles of financial analysts, manufacturing experts, and a whole host of other professions and uses. There were conferences dedicated to AI, journals focused exclusively on AI, numerous vendors that made products that were "AI" in some way, and consultants and analysts deploying solutions and making all kinds of predictions. Where is AI today?

One rarely hears about AI because its usefulness has been outlived. However, the legacy of AI lives on in many forms, including technologies widely in use today. What initially was deemed an intelligent system by the first programmers came to be looked upon as simply clever, but useful, coding techniques.

We predict that UC will follow the same path that AI followed. UC is sort of a fad, fashionable for the current season with conferences, papers (like this one :) ), a host of vendors sporting UC products, and a consultant and analyst following. Like AI, UC will also leave a lasting legacy.

It is clear that in the telephony world, the table stakes now include some form of a UC client that includes integration with the PBX for click-to-call/click-to-conference, directory integration, presence/IM, and usually video. The more sophisticated UC solutions include integration with the email system, integration with standard office desktop software, and a much richer presence engine. Like AI, UC concepts will ultimately become so commonplace in the market that people will cease to talk about it. So where does this leave us with respect to UC today and how to capitalize on UC now and in the future?

10) The Need for Process Improvement Initiatives
One of the startling results our 2008 UC survey uncovered was that very few companies followed any kind of an organized process when considering and deploying a UC solution. When we say process, we mean a series of steps one might take for any process improvement initiative, including things like needs assessments, strategy development, ROI analysis, vendor management, metrics, and so forth. We are pleased that the 2009 survey results, shown below, illustrate that many more companies are working harder in the beginning stages of a UC initiative by focusing more on assessing the organization’s needs and developing a strategy with respect to any identified UC requirements. This may be a partial result of the current economic downturn, in which companies may need to better justify certain expenses. Regardless of the reason, we are pleased to see assessment and strategy development occurring in more companies with respect to unified communications.

Figure 5. How far along is your company toward implementing UC

We believe that following some type of a defined process improvement framework and assessing the needs of the organization followed by strategy development are critical precursors to developing communications enabled business processes (CEBP), which is where the bigger benefits of UC will occur. However, CEBP is not easy, and it requires that an organization review how it does its business from a disciplined, process-oriented approach. Such an approach is needed to identify where the organization’s business processes can be improved and how, if at all, a more unified communications approach can help.

There are many frameworks that can be used to provide a disciplined approach to business process improvement. At Wainhouse Research we have chosen to adopt a modified form of the Capability Maturity Model Integration developed at Carnegie Mellon but with specific application to unified communications deployments. When considering a unified communications project we do so with the following framework in mind:

* UC Configuration Management
* UC Measurement and Analysis
* UC Process and Product Quality Assurance
* UC Project Monitoring and Control
* UC Project Planning
* UC Requirements Mangement
* UC Supplier Agreement Management.

For each of these areas, there are guidelines with measurable goals that a UC effort should bear in mind, and practices relating to planning and deploying UC that a process improvement team will want to use or at least consider.

Unified communications is a concept and not a product. Consequently, measuring the UC market can only be done in terms of the kinds of communications and collaboration components that may be included in a UC solution. Because UC is an idea, a solution embracing the concept of unified communications may look entirely different from one deployment to the next.

In the overall scheme of things, UC is a low priority for many organizations. It will probably be the IT department that spearheads most UC deployments, and these will percolate within most organizations rather than being deployed everywhere in a sort of big bang rollout.

Microsoft has a significant lead when it comes to UC client mindshare; however, the market is still wide open as most companies have not made their UC client choice. The UC client with its associated presence engine may have significant impact on the other UC functionalities deployed.

Few people really have a sense of what a UC solution costs. Many people get UC clients and some associated capabilities bundled in with some other purchase or at little or no charge either to make the sale or to get the client into the hands of the users. Some UC capabilities are widely available for free, particularly presence/IM engines and desktop video; it is unlikely that companies will pay much for these UC elements. Open source voice is available, but most people still pay a PBX vendor for a voice solution versus those available for free.

UC is at the cusp of benefiting from virtualization capabilities, particularly as they relate to real-time media. Although unified communications as a service typically is more expensive than a premises-based solution, this market is growing at a significant pace. When voice and video can be virtualized, we believe pricing for hosted UC solutions will fall significantly, making them comparable with premises-based offerings.

UC as an idea has caught the imagination of entrepreneurs and end users alike, becoming fad-like and fashionable. However, with time, the ability to unify various communications capabilities, even from different vendors, will be table stakes in the communications market, and the world will move on as UC will be commonplace.

In order to create a communications enabled business solution, enterprises would do well to utilize some type of process framework. CEBP is hard, and most organizations will not invest the time and resources to do it. Those that do can sometimes realize tremendous benefit from a UC deployment.

About the Author
Brent Kelly
is the UC Practice Manager at Wainhouse Research where he has written numerous articles and reports on unified communications. He has taught seminars at VoiceCon and is a featured speaker on the use and deployment of collaborative communications technologies. Brent has a Ph.D. in engineering from Texas A&M University and a B.S. in engineering from Brigham Young University.

About Wainhouse Research
Wainhouse Research provides strategic guidance and insight on products & services for Real-Time Unified Communications. The global client base includes established and new technology suppliers and service providers as well as enterprise users of voice, video, streaming, distance education, and web collaboration solutions.