Dave Michels
Dave Michels is a Principal Analyst at TalkingPointz. His unique perspective on unified communications comes from a career involving telecommunications...
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Dave Michels | February 26, 2014 |


We Need More Cloud

We Need More Cloud Move over cowbell, the bosses are now calling for more cloud.

Move over cowbell, the bosses are now calling for more cloud.

Move over cowbell, the bosses are now calling for more cloud.

IP-based communications made the modern concept of hosted communications possible a decade ago, yet this new technology is still the exception, though it's gradually growing. The gradual part is about to change, however.

Those that relegated hosted UC to the Centrex file need to update their perceptions. Prepare for a significant acceleration as organizations determine that on-premises equipment is slowing them down.

I wasn't big on the cloud initially. There were too many compromises in features and quality. The initial solutions took premises-based products and propped them up as a service.

At first, it appealed primarily to small businesses because it simplified matters (administration, management, and costs). The cost was simple to grasp, and the admin was outsourced. It delivered "big business features, to small businesses" and impressive value that eliminated extensions and included a fancy phone (or no phone), unified messaging, free or cheap long distance calling, and no significant up-front costs.

Larger firms weren't so easily converted. The price/user/month didn't scale well. Providers typically complicated or prevented advanced integrations--though such integrations had been one of the promises of VoIP. There were concerns about quality of service, and administrators weren't willing to cede control. It seemed that the midmarket and enterprise were impervious to the cloud.

Obstinacy can delay, but not stop, big ideas. Line-of-business heads and end users bypassed IT to solve problems on their own. However, it was probably the iPhone that cleared the biggest path.

The iPhone instigated the modern age of mobility. Suddenly, everyone needed access to company services such as email, and the VPN model wasn't going to cut it. Cloud services offered instant connectivity and gratification without the hassles. IT was resistant, but most succumbed to the pressures and enabled BYOD. In the race to be mobile friendly, every major telecom and computing vendor has (in some way) validated the cloud.

We are in the midst of huge migration to cloud-based services. In the past five years or so, nearly every major CLEC has expanded into hosted UC. Nearly every major premises vendor has directly entered the hosted market or repositioned products to target service providers. Internet services are as critical to business as electricity. Prior to the announced merger, it was predicted that Comcast will have more Internet customers than TV subscribers this year. Blockbuster stores are gone, but Netflix thrives.

The cloud has brought some of the largest (Facebook) and most successful (LinkedIn) recent IPOs. Google keeps benefiting from its cloud playbook: search, Chrome browser, ChromeOS, Google Compute Engine, and Google Apps. Underneath the facade of a bookstore, Amazon IaaS/PaaS cloud revenue grew 55% last year--that is believed to be greater than Microsoft, Google, and IBM combined.

Amazon and Google may be relatively young challengers, but even the traditional data center players are leveraging the cloud. IBM grabbed SoftLayer, got out of PCs and small servers, and just announced a billion-dollar PaaS initiative. Microsoft continues to prioritize Azure, Bing, Skype, and Office 365. Cisco sees cloud bucks in the Internet of Things, HCS, and just reported WebEx and Meraki as high-growth stars. Even on-premises, clouds are virtually everywhere. The primary purveyor of private clouds, VMware, is doing well (while Dell and HP are restructuring). Next up will be the network with SDNs.

Every premises-based UC vendor has highly strategic cloud initiatives. Hosted UC firms are growing 10% to 20% per quarter, and new firms keep emerging. The youngest of the major premises vendors is ShoreTel - founded in 1996. Meanwhile, the cloud landscape is explosive. It is filled with new firms like Thinking Phone Networks, 8x8, RingCentral, and Fonality. Many of these cloud providers got their start from the cloud elders Digium (1999), Genband (1999), Metaswitch (2000), and BroadSoft (1998).

While sales of premises-based video equipment has slowed, hosted video services continue to explode. Emerging solutions such as Facetime, Hangouts, Skype, Lifesize, Vidyo, Blue Jeans--the list goes on. Every one of these either is a service model or offers one.

All this cloud stuff crept up on us. Five years ago, it was early--now it is mainstream. I remember noting at VoiceCon 2010 that there were hardly any cloud-oriented firms at the event--this is not the case at Enterprise Connect 2014.

I regularly meet folks who insist that the cloud is more expensive, not ready for prime time, or not applicable to UC. While all of those points can be true, it doesn't matter. The cloud is winning for some very simple reasons: agility, scalability, pay-as-you-go, and risk mitigation. Most financial models are misleading because they were built to compare like premises-based alternatives.

Most financial models require assumptive inputs. Unfortunately, most long-term assumptions are wrong. We live in dynamic times: economic conditions, war/peace, technology (codecs, endpoints, networking), expectations, etc., all change faster than depreciation schedules. Factor in the likelihood of rapid change, and the cloud shines. When requirements change, change providers.

The transition may be difficult, and you may feel your legacy installed base exerting a drag on you. That's not surprising: Ships have anchors, enterprises have servers. But you can't afford to let them weigh you down.

During the last decade, the iPhone changed mobile computing. When the next big change comes around, will all that equipment in the data center help or hinder? That's a hard one, here's an easy one: When a provider wants to carry all that risk for you--why say no?

Let's discuss this together. I'll be moderating "What's the Real Case for the Cloud?" at Enterprise Connect on March 18 at 4 PM. Join me.

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