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Cloud communication services are not for everyone

Large enterprises, in particular, have been wary of adopting cloud-based communications for a variety of reasons. But that sentiment might be changing.

Given the hype around cloud communication services and the aggressive marketing pitches by unified-communications-as-a-service...

vendors, IT leaders who haven't moved their phones to the cloud might think they're falling behind their peers. Or are they?

Many on-premises systems are still out there, according to a Nemertes Research study on unified communications and collaboration. More than 700 companies participated in the study, and 47% of them still use on-premises platforms for their telephony and UC needs. 

More than 40% of companies said they still have digital phones for at least half of their endpoints; so, they haven't moved to IP telephony yet, much less cloud. Just 28% have fully migrated to a pure-cloud UCaaS product in which telephony and unified communications services are provided via a multi-tenant, shared service on a subscription basis.

Digging deeper into the data, we find a clear line of demarcation among sizes of companies. Smaller organizations with fewer than 2,500 employees are far more likely to adopt cloud communication services than their larger counterparts. Primarily, this is due to cost.

Larger companies, operating fully depreciated telephony platforms, may find it difficult to justify the cost of going to the cloud. However, cloud communication services can still deliver greater agility and faster access to new applications and features.

Weighing agility, security and costs

Companies not evaluating the potential of cloud communication services do indeed risk falling behind.

Despite cost concerns, larger enterprises are increasingly planning for a cloud future for a variety of reasons:

  • Their vendors are taking them to the cloud. Cisco and Microsoft have been pushing Spark and Teams, respectively. Both products are cloud-only UC and collaboration platforms. Other providers, such as Avaya and Mitel, have continued to develop pure-cloud offerings to give customers a clear migration strategy from on-premises systems.
  • Cloud equals greater agility. Adopting cloud communication services enables faster access to new features. The cloud breaks the multiyear upgrade cycles that limit the ability of organizations to take advantage of new features like team collaboration, or integrate communications into business-process applications and workflows. Most UCaaS providers offer integrated features such as contact center, desktop video conferencing and web conferencing.
  • Security. Nemertes' recent IT spending research found that spending on IT security is rising on average by 13% per year. At the same time, overall IT budgets are increasing less than 3%. This means an ever-increasing percentage of IT spending is going toward security. One way to break this paradigm is by shifting services to cloud providers who already have sophisticated security capabilities. We've found nearly half of IT leaders now say they believe cloud apps are more secure than on-premises platforms.
  • A shift to strategic. Moving on-premises platforms to the cloud frees up IT resources to focus on user adoption, alignment of collaboration services with business needs and the ability to support digital transition initiatives, rather than server and application maintenance.

Still, cloud is not for everyone. Large companies, especially in regulated industries, may not trust cloud yet, or they may not operate in a governance environment that allows for cloud communications adoption.

Some organizations are still scared by the costs of shifting from perpetual licenses to cloud. Others may simply not yet trust the quality and reliability of UCaaS providers. 

But overall the trend is clear: An ever-increasing number of companies are shifting their communications platforms to the cloud to improve agility, deliver new features and better align IT with business needs. And companies that are not evaluating the potential of cloud communication services do indeed risk falling behind.

This was last published in November 2017

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