UC transition from PBX systems surges as vendors end PBX support

After years of predictions, the enterprise transition from PBX systems to UC platforms is finally gaining speed as vendors phase out PBX support.

In late 2011, the Weill Cornell Medical College received the last software update for the Nortel PBX system that had run its analog and IP phones since 2005. At the same time, Cornell was still two years away from completing its Belfer Research Building, which would add 600 new phones to the medical school's network.

The combination of growth and no PBX support made the decision to phase out the legacy system easy. "If we're going to put in 600 new phones, why are we going to do it on a legacy system that may not be supported?" said John Young, Cornell's unified communications services manager.

The industries that have moved the fastest in replacing PBX systems have been those that depend on multi-channel communication with customers and partners.

Many organizations are making the switch to UC platforms from time division multiplexer (TDM) private branch exchange; IP PBX or a hybrid of both. While these workhorses have served users well over the years, high maintenance costs, the inability to add many more phones and the lack of modern-day communication features is driving many organizations like Cornell to switch to UC.

In the second quarter of 2013, worldwide revenue for all types of enterprise PBXs fell to $1.18 billion, a 9% decline from the same period a year before, according to Infonetics Research. On the other hand, UC revenue soared 34% the same quarter.

For the full year, Infonetics expects the UC applications market segment to increase by more than 21%, while the enterprise PBX market declines by almost 3%.

Making the move from PBX to UC platform

The transition from PBX to UC is in high gear, but as the numbers show, companies aren't tossing their PBX systems all at once. Instead, they're choosing to remove them gradually. For example, Cornell plans to take as long as two years to move the 3,000 phones on the old system to Avaya's UC platform.

Avaya is the main vendor for the Cornell project, because in 2009, Avaya bought the Nortel business unit that made phone systems for business. The 600 phones in Cornell's Belfer building, which opens in mid-January 2014, will be the first to go live on the new system. Users on the Nortel system will be migrated over one department at a time, Young said.

A gradual approach is what technology research firm Gartner recommends. Companies should choose an anchor vendor and then migrate employees slowly, starting with those who would get the most use out of the instant messaging, audio and video conferencing, and Web collaboration that UC platforms provide.

"For us, it doesn't mean you need to move everybody on to that platform, because not everyone needs it," Steve Blood, networking communications analyst for Gartner, said.

Companies heavily invested in any kind of PBX system can hang on to them longer by bolting on UC applications from vendors like Microsoft or IBM, Blood said. This provides access to some UC features, while the PBX handles all inbound and outbound voice traffic.

Between 2000 and 2006, many organizations switched from a traditional TDM PBX to its Internet-based replacement, the IP PBX, or to a hybrid system. After 2006, telecom equipment makers started nudging customers toward software-based UC platforms.

The number of IP-based communication systems surpassed TDM PBXs around 2011, according to Gartner analyst Jay Lassman. Now, 55% to 60% of the PBX market is IP-based.

"[Organizations] understand the market has definitely changed; whether they're taking any action is a separate issue," Lassman said.

What are the main UC options, and who needs them?

A UC platform includes several broad communication product areas, according to Gartner. These include IP PBX, video, voice and Web conferencing; messaging, which includes email and voicemail; and instant messaging and presence, which is the ability to locate someone across communication channels. Other features include a unified client for reaching others via the Web, telephone or mobile device, and communications-enabled applications. The key application areas include collaboration, notification, consolidated administration, reporting and analytics.

Using all of the capabilities of a UC platform can be overkill, so many companies only deploy the features they need. The most popular are instant messaging and presence.

More on the PBX lifecycle

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When enterprises pull the plug on the PBX system

Vendors vie for attention in PBX hardware market

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Departments that typically need UC first are marketing, sales and design, Gartner's Blood said. The industries that have moved the fastest in replacing PBX systems have been those that depend on multi-channel communication with customers and partners. Those industries include financial services, healthcare, higher education and design companies.

Employees who don't need anything more than basic telephone service should stay on legacy systems, provided the older PBX system is still performing well.

Manufacturers, retailers and other large organizations with multiple facilities, each with its own PBX system, tend to move slowly to the latest communication systems. When they start the move, it can take five years or more.

"A lot of it depends on how many users a company has and how many locations," Gartner's Lassman said.

The UC migration process often begins when laggards find that the limitations of PBX, when compared to a modern UC platform, are hampering their ability to compete against rivals that have made the switch and are better able to collaborate and communicate with partners and customers.

Also, organizations that open branch offices, move their headquarters or make an acquisition will find that the time is right to modernize their communications system.

UC decision process includes where to deploy a platform

Once the decision is made to start the migration, companies will have to decide whether to deploy a UC platform on-premises or choose a public cloud. There's also the option of having a combination of both.

"[Companies] recognize the benefits of IP, and now they want to know what the delivery model should be," Lassman said. "We get more and more questions about cloud and hosted than anything."

Preparing for the migration from an older PBX, no matter the type, to a modern UC system should include working out a schedule for the switch with the affected departments and training users on the new phone system.

Engineers should focus on replacing basic phone service with the UC system before adding other services. "The core system has to be in place for all the ancillary systems to be put in," Young said.

PBX systems that work well are hard to leave for a lot of companies. "Customers get used to not spending any money on their voice platforms. They just pay maintenance every year, and that's what they expect," Gartner's Blood said. "That's the lowest cost of ownership for them, and as long as they're not expecting to do anything more than just make phone calls, then that's fine."

Eventually, however, the majority of companies will have to migrate off of legacy systems, since maintenance costs will increase as the reliability of older PBXs falters over time. With parts and bug fixes no longer coming from the manufacturer, users will have to turn to expensive service contracts from third-party providers.

Deciding when and how to make the transition is a delicate balance. Companies that wait too long to make the move to UC may be shortsighted. Enterprises want to get the most out of a PBX workhorse, but increasing UC options will continue to move the decision-making process along.

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