What UC costs: The real TCO of unified communications

The total cost of ownership for unified communications has risen significantly since 2012. Learn why and which vendors offer the best value.

Nemertes Research recently studied the total cost of ownership (TCO) for IP telephony solutions from leading vendors. In addition, we took a look at the more complicated issue of unified communications (UC) TCO. As we did for IPT, we gathered data from 189 end-user organizations comprising a range of sizes and verticals. Most startling, UC implementation costs rose by 83% from 2012 to 2014.

Quantifying UC costs

UC costs (and benefits) are often difficult to quantify, as the characteristics of UC deployments vary greatly among organizations. Some may choose only to implement instant messaging, voice and video conferencing, while others may tie in telephony and integrate desktop and room systems. UC deployment strategies typically include a mix of on-premises and cloud, along with appliance-based and virtualized applications. Increasingly IT shops are extending UC features to mobile devices like smartphones and tablets. For this study we focused on integrated UC solutions that combine various real-time and non-real-time applications into a common user dashboard. Just one-third of participants said they have a single strategic UC vendor providing the majority of applications. The rest rely on a mix of UC vendors, not considering any particular one as "strategic."

Total UC costs by vendor

We gathered enough data to look at four leading UC vendors: Avaya, Cisco, IBM and Microsoft. IBM stands out a bit in that it is the only one not providing IP PBX functionality as part of its UC suite. Microsoft lacks room-based video systems except through partners. Only Avaya and Cisco offer what can be construed as end-to-end UC comprising all common UC features (voice, conferencing, video, telephony and instant messaging), though both lack broader collaboration applications like email, calendaring and document sharing.

For those just deploying UC features, median costs ran about $954 per license in the first year, an increase of $522 from 2012. The increasing cost is generally attributable to increasing complexity as a growing number of companies look to tie their IM/presence and conferencing applications into their telephony systems. Avaya's first-year cost of $817 is the lowest of the four vendors we studied. Avaya's low cost comes primarily from its lowest capital cost ($167 per license). Avaya's customers are often able to leverage existing investments in desktop phones and headsets. Microsoft's costs were highest at $1,265 per license, due to the need to procure headsets and expand virtual servers to support Microsoft processes, as well as the need to obtain additional servers for external access and teleworker support.

Those using multiple providers had the second-lowest first-year and capital UC costs (behind Avaya). UC implementation costs were highest in this particular scenario due to the need to manage integration of disparate vendors, train staff and engage with managed service providers to navigate interoperability challenges.

UC cost per license breakdown: 2014

Those developing a UC strategy should pay attention to costs, especially the gotchas like integration and ongoing management. Understand that implementation of UC will likely involve a continuum of ever-expanding applications and integration points. Investment in training and management will be necessary to deliver an optimal solution.

This was first published in May 2014

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