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Should You Get Your Head in the Cloud?

I was recently asked what I believe is the most over-hyped technology in UC these days, and my first thought was "the cloud." Don't get me wrong--I believe that the cloud offers great opportunity for many businesses and is a great way for companies of all sizes to access UC capabilities in a relatively cost-effective way. Cloud-based services will be especially attractive for specific capabilities, such as contact center, and I expect the majority of new contact center deployments in the coming years will be cloud-based.

But, several years ago I thought this whole "cloud" thing would blow away (pun intended). I assumed that it was a fad, and that after a while, companies would revert back to their premise-based solutions for their primary voice communications. While it's still too soon to say whether this will be the case, it's clear that the vast majority of customers looking into deploying UC are including cloud options in their evaluations.

There's no shortage of hosted or cloud-based UC offerings. Traditional premise-based vendors such as ALU Enterprise, Avaya, Cisco, Mitel, NEC, Siemens, and others have introduced offerings that they host either themselves or through service provider partners. Many companies offer Microsoft Lync as a hosted service, providing yet another alternative for customers. And of course there are all the service providers that now have hosted offerings, including AT&T, Sprint, Telstra, Verizon, and Orange, as well as companies like Thinking Phone Networks and many others.

There are clearly benefits to using a hosted or cloud-based service--particularly in terms of the financial model. More and more companies, regardless of size, are moving toward using an OpEx model rather than a CapEx model, and are clearly attracted to hosted services for this reason. In addition, by using a hosted model, companies can be guaranteed to get the latest and greatest features as they're introduced, and don't have to do anything to stay current with new releases--it's done automatically. UC services can be up and running much more quickly in a hosted or cloud deployment compared with a premise-based solution, and new users can easily be added. There's no doubt that these services can be extremely practical for many types of companies, particularly distributed companies with branches in various locations (assuming the service is available in all of those locations).

That said, I have no doubt that the cloud makes perfect sense for SMBs. Companies like 8x8 and Fonality are doing a great job of providing UC capabilities at very reasonable prices, especially for the low end of the market. These services include most, if not all, of the UC functionality those companies need, at prices that SMBs can afford. If not for these cloud services, many SMBs would be priced out of the UC market.

I'm more skeptical of the hosted UC for large companies, especially those requiring integration with existing systems and applications. While the initial cost of hosted solutions is lower than for premise solutions, most analyses have shown that the TCO of hosted solutions is actually higher than that of premise solutions after a few years. As Brent Kelly, Marty Parker, and David Stein discovered from their RFP session at Enterprise Connect, "There is a clear crossover point between on-premises and hosted solutions. Furthermore, the hosted offerings initially cost less, but almost universally turn out to cost more by the end of the five-year period."

Cost is one element, but what about control, reliability, and customization? With cloud solutions, companies become reliant on the hosting or service provider, as well as the quality of the network. Enterprises give up part of their control when offloading their communication systems to a cloud provider. It's harder to customize solutions, and even harder to integrate the service with the organization's business processes and applications.

I'm still optimistic about cloud services and expect to see the number of new users continue to rise in the coming years. However, I also expect to see a minor backlash as some large--and even mid-sized companies--realize that hosted and cloud services may not be all they're cracked up to be.

The cloud is the buzzword du jour--but you need to carefully evaluate whether it's right for you for now and the coming years. Don't go blindly to the cloud just because that's what everyone else is doing--make sure that hosted or cloud services make sense for your company and your specific needs and situation. Cloud solutions make sense for a lot of companies, but you need to do your homework to make sure that they make sense for you.

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