UCaaS Magic Quadrant: Providers not ready for large enterprises

Gartner's latest Unified Communications as a Service (UCaaS) Magic Quadrant reveals an immature market that is better suited for SMBs than large enterprises.

Outsourcing communications to a Unified Communications as a Service (UCaaS) provider remains a risky strategy for most large enterprises. According to Gartner's newly published UCaaS Magic Quadrant, most UCaaS providers either lack a full suite of integrated unified communications functionality or cannot scale their services to meet the needs of large, distributed enterprises.

Due to this lack of options for large enterprises, Gartner's UCaaS Magic Quadrant identifies no market leaders. Instead, it is filled with challengers, visionaries and niche players. While large-scale technology vendors and service providers identified as challengers in the Magic Quadrant are expected to introduce stronger UCaaS solutions into the market this year, Bern Elliot, vice president and research analyst at Gartner, said he believes that 2012 presents an opportunity for both established vendors and niche vendors alike to develop UCaaS solutions suitable for large enterprises.

UCaaS Magic Quadrant: Technology vendors, large service providers lead field of challengers

Large service providers and vendors populate the list of challengers in this year's UCaaS Magic Quadrant, including Microsoft, which last summer debuted its Lync Online UCaaS offering. Other challengers include Verizon, Google and AT&T, along with UCaaS specialist West. Challengers are companies that Gartner has identified as having a strong ability to execute for their customers. These UCaaS providers are capable of delivering most UCaaS functions, but their solutions are either immature, unavailable to new customers, or sold primarily as add-ons to the installed client base, according to the UCaaS Magic Quadrant.

Kevin Rice, global network architect at global management consulting firm A.T. Kearney, uses both Cisco and Microsoft solutions for UCaaS. Rice said he believes that both vendors are evolving their solutions and could vault into leader positions in the Magic Quadrant by next year, based on his experience using Cisco CallManager for desk phones and Microsoft Lync for softphone capabilities.  However, he noted, the ability of most UCaaS providers to deliver global services remains limited.

"[A leader] would definitely have to have a global service offering -- something similar to what we are getting with Skype," said Rice, who also said he believes Microsoft's acquisition of Skype should improve its ability to deliver a global UCaaS offering.

Rice said he expects Cisco to strengthen its UCaaS capabilities by transitioning its technology expertise into the cloud.

"Cisco's strengths would be that they have the network and the expertise from a communications standpoint, based on the success that they've had with CallManager," Rice said. "I think being able to duplicate that and being able to make that a softphone capability that you can use in the cloud would be something that would be clearly a part of Cisco's core competency."

Doug Saunders, IT director of Republic Services, a Phoenix-based, 31,000-person waste management company, uses Cisco's CallManager and Unity Unified Messaging products for wireless mobility. He said that while smaller UCaaS providers may have robust cloud solutions, Cisco has proven UC capabilities that will help the vendor become a leader in UCaaS "as the space matures and [Cisco] can then offer a full suite of applications."

Niche players in UCaaS Magic Quadrant: Providers with limited North American reach

Gartner dubbed Siemens Enterprise Communications and U.K.-based global telecom provider BT as niche players in the UCaaS Magic Quadrant, due to their limited ability to deliver services in the North American market.

 "While BT has not established [itself] with a full portfolio in North America, [it is] operating more effectively in other regions of the globe," said Elliot, Gartner's vice president and research analyst.

BT also needs to build out its unified communications functionality. Today, BT offers mostly standalone service components, such as conferencing, rather than a full and integrated suite of UC capabilities.

But BT is working hard to shift its focus, according to Elliot. On Jan. 4, BT and Microsoft announced a collaborative effort in which BT will host Microsoft's Lync Voice Pilot in its operating center for U.S.-based customers. "Lync is a big product for Microsoft, and BT is very serious about the collaboration," Elliot said.

While BT's hosted offering differs from a multi-tenant UCaaS solution, Elliot said he believes that this "private cloud" offering is going to become quite attractive in the UC space in 2012.

UCaaS Magic Quadrant visionaries offer robust functionality to SMBs

Four application specialists populate the field of UCaaS Magic Quadrant visionaries, defined by Gartner as providers who score highly for the completeness of their technology vision but who have a limited ability to execute for their customers.

Elliot noted that while these typically small public or private companies are not yet able to scale at a national level for large enterprises, they do offer a full set of functionality for their customers, a clear understanding of the UCaaS market and a differentiating approach to one or more core areas. The visionaries include Thinking Phone Networks, Cypress Communications, PanTerra Networks and M5 Networks.

"If you mention these names to an IT manager, they might not know who [you] are talking about, as opposed to the names of the challengers," Elliot said. "To be a leader in this kind of a market, you need to have a fair amount of brand recognition, and you don't get that right away."

These UCaaS providers must also prove their ability to scale in order to become attractive to more midsized and large enterprises, according to Elliot. These providers will have to build out additional infrastructure in order to support more and larger customers.

"Microsoft, AT&T, Verizon, Cisco and West already have tremendous infrastructure in place in their network operating centers, so they are in a very different place than the visionaries," he said.

UCaaS leaders in 2012: It's anybody's game

The UCaaS Magic Quadrant describes a young and developing market, filled with large vendors and service providers progressing slowly into an immature environment.

"The service providers are big and not nimble," Elliot said. "While the functionality is known and available, the ability to deliver the full set of functionality as an integrated [suite] is new to service providers."

Elliot said he anticipates that many vendors and providers will roll out new solutions this year, while niche vendors will continue to focus on specific regional markets. "There is definitely space for all different kinds of vendors. I think the market will be very different next year."

Let us know what you think about the story; email: Gina Narcisi, News Writer

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