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Changing business priorities drive cloud UC adoption

The demand for flexible systems and collaboration tools is helping drive UCaaS adoption across all market segments. However, business size is playing a role.

Organizations of all sizes are making the leap from on-premises PBXes to cloud communications as changing business priorities are driving demand for advanced collaboration capabilities and cloud services that can support mobile workers.

While small and midsize businesses have been the quickest to adopt unified communications as a service (UCaaS) and make up the majority of cloud UC users, enterprise adoption of UCaaS has increased substantially, according to a report from Synergy Research Group.

The number of enterprise UCaaS subscribers grew by 57% in 2018, according to the report. In the past, many enterprise organizations favored on-premises PBXes for the level of control and customization they offered. According to Frost & Sullivan Inc. analyst Elka Popova, the demand for flexible delivery models that provide advanced communication features, as well as mobile and integration capabilities, is now driving enterprises to adopt UCaaS.

"The growing number of remote and mobile workers, the influx of millennials into the workforce and the simultaneous globalization and localization of business are creating strong demand for cloud services that deliver operational efficiencies, productivity benefits and a competitive edge," Popova said.

The factors driving cloud UC adoption

The changing nature of business is a driving force for much of the growth in UCaaS adoption across all business segments. A survey from Frost & Sullivan found that businesses are adopting UCaaS for reasons including easier management for IT, better security, increased focus on the core business, support for remote and mobile workers, and cost-effective scalability.

Most of the traditional PBX vendors are falling behind in terms of providing the enterprise with productivity and collaboration tools, so UCaaS players are filling that hole.
Jeremy Dukechief analyst and research director, Synergy Research Group

While some enterprises will stay with an on-premises PBX to meet specific industry requirements, the UCaaS market is expected to maintain double-digit growth through 2024, according to Popova.

The enterprise UCaaS market segment was traditionally underserved due to product immaturity, but UCaaS vendors today are able to offer the more mature services that enterprises need, according to Jeremy Duke, president and analyst at Synergy Research Group.

"Most of the traditional PBX vendors are falling behind in terms of providing the enterprise with productivity and collaboration tools, so UCaaS players are filling that hole," he said.

Many cloud UC vendor offerings include highly sought after features such as video calling, chat, contact centers, reporting and analytics, and mobility. These features give UCaaS an edge in optimization and collaboration that a traditional PBX can struggle to provide.

The Frost & Sullivan survey also revealed that organizations place value on capabilities such as service reliability, collaboration tools, security and interoperability with third-party offerings. UCaaS vendors have responded to demand by investing in more tools and features, as well as better interoperability to enable customers to remain with one vendor for all of their UC needs.

Breaking down the cloud UC vendor landscape

While UCaaS adoption is growing across businesses of all sizes, the leading vendors vary by business size. According to the Synergy report, Mitel Networks Corp. is the most popular vendor among small businesses with fewer than 100 employees.

Mitel's acquisition of ShoreTel helped expand its reach in the UCaaS market by combining the two platforms and allowing Mitel to capitalize on ShoreTel's hybrid approach to UC by making use of the existing infrastructure. Duke said Mitel was able to lead in the small business market because its competitors, including RingCentral Inc. and 8x8 Inc., were focusing their attention on midsize organizations with between 100 and 999 employees.

The top vendors for enterprises with more than 1,000 employees are Fuze Inc., RingCentral, 8x8 and Mitel, with Fuze leading the pack. Duke said Fuze was one of the first UCaaS providers to target larger enterprises and advance its offering -- including team collaboration, contact centers and analytics -- much more quickly than other vendors in the market.

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