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How Will UC Fare in a Tough Economy?

The good news is that the industry has seen--and survived--crises before, so we have some idea of what might happen. Let's assume that this crisis will take up to 25% off the Dow Industrial index as in mid-1974, late 1987 and late 2001. And, let's also assume this adds several points to the unemployment rate and puts profitability and capital spending pressure on U.S. companies, if not in other sectors of the globe. Not a pretty picture.

So, how will the emerging UC industry do in this setting? Not so bad, if history is our guide. Here are some typical scenarios in times like these--maybe you will find some ideas for your own enterprise action in these past examples.

1. Cost control comes to the forefront. Companies will become very attentive to costs, and will focus on cutting wasteful activity, an area where UC has already shown its value. Travel cut-backs will be imposed, but some of the slack can be picked up by conferencing and collaboration tools. Getting work done with fewer people is exactly what some companies have used to justify more use of presence and IM. Cutting the mobile telephony bill may invoke UC solutions to minimize the minutes. Eliminating international toll costs can be reduced with Internet peer-to-peer calling with both consumer and business-class UC clients. And, UC can be deployed strategically in the workgroups that need it the most, making it more economical.

2. Capital projects get postponed. If there's a credit crunch, major purchases will get postponed. If the rollout of big IP-Telephony projects slows down, some enterprises will fall back to smaller investments that will "do the job." In this case, we could see UC purchases, especially of niche products such as Digium Asterisk or Microsoft Office Communications Server that weren't quite good enough when there was plenty of money.

3. Enterprises seek to innovate out of the problem. Some companies will use this time to stimulate transformative innovation. Self-service technologies, such as voicemail, IVR and websites have all benefited during times of economic pressure. Also, some companies will find that they have to slash headcount and the remaining managers and employees will need to restructure their work. UC, with various forms of communication automation and collaborative work tools, will be one of the sources available for innovative solutions to these pressures.

4. Government will spend in targeted areas. Don't assume there won't be economic stimulation packages. The next administration, whoever wins the elections, is very likely to pump funds into job-producing industries, such as alternative energy production. Where this spending supports new businesses or locations, it will be possible to take a "greenfield" approach to communications infrastructure extension, and that typically favors emerging--UC--rather than mature--IP-PBX--products.

5. Product lines get pruned back. Since technology vendors will feel the economic pressure like everyone else, we should expect to see some curtailment in spending for R&D and marketing; program consolidation is very likely. As we saw when the tech bubble burst, some new technologies will be shelved, which would certainly be bad for some UC efforts. In other cases, suppliers will truncate their legacy products and "bet" on the future. So, this will be a mixed bag for UC.

6. The rich get richer. In most times of economic stress, market leaders extend their leads. They have cash to spend, their investors expect some softening of profits anyway, and the assets they need for growth are for sale at bargain prices. So, for those firms that are in UC leadership roles and have the assets (think: Cisco, IBM, Microsoft, Nokia, RIM,, SAP), we are likely to see them just keep coming, targeting major share gains by the time the recovery comes (as it always seems to do).

So, while this economic crisis cycle will scale back the communications industry in general, UC may well persist and even thrive during the restructuring and recovery processes. We will see, in just a few years, whether this economic trouble is a catalyst for UC or whether it postpones its emergence. Based on past examples, I wouldn't count UC out.