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Hosted unified communications booming, and not just due to cloud hype

Hosted unified communications is becoming a viable alternative for companies of all sizes as vendors and service providers start to bring more mature products to market. Unified Communications as a Service (UCaaS) is enjoying such a boom that Gartner has published its first Magic Quadrant for the market.

Unified communications is edging toward the cloud as vendors look to position their technology as services rather than products. Hosted unified communications is seeing a little bit of a boom as a result, since many enterprises would like to upgrade their communications with minimal front-end investment and risk.

"We are just starting to see trends for more service delivery over the cloud," said Dan O'Connell, research director at Gartner. "I would not say it's the future of unified communications, but I think the market is going to support both on-premise and cloud-based unified communications."


The market for hosted and cloud-based unified communications services has developed significantly in the last couple of years, just as overall interest in cloud computing has enjoyed something of a boom. These developments prompted Gartner to publish its first Magic Quadrant for "Unified Communications as a Service" (UCaaS) this month. O'Connell noted that this quadrant applies only to the North American market.

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The fundamentals of hosted and managed VoIP

The unified communications services market is still rather immature, O'Connell said. And a snapshot like the Magic Quadrant makes it look a bit of a jumble. First of all, there are no leaders in this quadrant. And the providers that are listed come from all corners of the technology landscape. There are infrastructure vendors like Cisco and Nortel, which have begun offering their own unified communications services. Then there are the hosted unified communications specialists -- many of which have been around since before the term "unified communications" came into vogue -- such as Cypress Communications and CallTower. And there are the telecoms, such as Verizon, BT and AT&T. Gartner has also included some other unique players, such as Google, Microsoft and Skype.

Dave Lemelin, senior analyst with In-Stat, said the interest in unified communications services ranges across the board, from small and midsized companies to large enterprises.

"Mostly, they are recognizing the benefits of the cost savings and efficiencies associated with unified communications," Lemelin said. "But at the same time, they don't have a lot of money to invest in capital in this economy, so hosted and managed solutions are attractive."

Hosted unified communications about more than cost savings

Since 2001, WorldWide Integrated Supply Chain Solutions, a small supply chain services company out of Iowa, has been working with LightEdge Solutions, identified as a visionary in Gartner's UCaaS Magic Quadrant. Carl Waldenmaier, executive vice president of technology services for WorldWide, said his company takes advantage of LightEdge's hosted Microsoft Exchange and hosted Broadsoft VoIP PBX services. He knows his next project will be to use LightEdge to bring true hosted unified communications services to his company with integrated presence and instant messaging. But it will take a little while for the company to get there.

"Right now in this economy, me trying to justify investment in instant messaging – that's not going to happen," Waldenmaier said.

Hosted unified communications offers WorldWide some obvious advantages, such as minimal acquisition and overhead costs and the guaranteed service-level agreements that LightEdge can offer with its redundant infrastructure. But Waldenmaier said LightEdge also offers a level of expertise with its unified communications services that would be hard for his company to acquire on its own.

"I don't have a bunch of people here trying to keep up with whether I should have a Polycom 510 or 610 or whether I should be going to digital voice," he said. "That's what LightEdge does. They're the experts on that. They're working across many other customers that are completely different from WorldWide. The value that LightEdge brings is more than just the physical system. It's the knowledge they gain from all their different customer[s]."

Hosted unified communications comes with some risks and challenges

Lemelin said some enterprises might see not developing in-house expertise with unified communications as a disadvantage. In fact, if your company adopts unified communications services, the IT department might not take kindly to the move.

But Waldenmaier said management of his own voice and networking infrastructure has never been a competitive differentiator for his company, so going with a hosted unified communications system was an easy decision.

Some enterprises may also sacrifice their ability to customize applications by going with hosted unified communications, O'Connell said. "There may be a certain way you want to back up email and do some sort of administration."

Since unified communications is a relatively immature market, he said, the features and platforms that are available via the cloud tend to be 15 to 18 months behind their premise-based counterparts.

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