For years, unified communications vendors have pushed cloud products. But many enterprise customers have pushed...
back and preferred to keep their technology on premises.
Enterprise cloud adoption concerns are valid: Companies want to maximize heavy investment in on-premises systems and use the technology until it reaches end of life. Plus, newfangled cloud technology was unproven and rife with security concerns.
Small and midsize businesses generated much of the cloud's initial momentum, but larger enterprises balked. While enterprise cloud adoption has been slow, some data indicated that trend could be changing, as enterprises become more comfortable with cloud options and security.
Analyst firm IDC has found the cloud accumulating interest among organizations of all sizes. In a survey conducted in December 2015, 39% of organizations said they had cloud-based unified communications (UC) implementations. Within two years, that number was expected to jump to 49%. By contrast, premises-based UC was at 43% and expected to drop to 34%.
"There's some significant momentum around going to cloud, even at the mid- to high-end enterprise," said Rich Costello, an IDC analyst tracking the unified communications market.
Security improving, but long-term costs in question
In the past, security concerns often thwarted enterprise cloud adoption. Enterprises were reluctant to share their data with anyone, Costello said. But now, improved security like cloud encryption is a key reason enterprises are gravitating toward cloud deployments.
Rich Costelloanalyst, IDC
"I've heard vendors say customers are not pushing back as much anymore on cloud security," Costello said. "That's a change from conversations I've had in the past. Two years ago, you heard organizations say, 'I don't even want to talk about cloud.'"
Security was seen as both a top benefit and concern for cloud-based UC deployments, according to IDC's survey. Thirty percent of organizations cited increased security as a benefit of unified communications as a service. But 40% of organizations said security was their top concern about deploying UCaaS.
While the cloud might seem safer these days and enterprise cloud adoption is picking up, long-term cloud costs are still in question. Initially, moving to the cloud could cut costs with minimal capital upfront expenses. But then, organizations face monthly or annual fees in perpetuity.
"If you look at a five-year model, then the cloud can be cheaper. But beyond that, not necessarily," Costello said. "Cloud is not always cheaper than on-prem. It's just a different way to pay."
How digital transformation and unified communications intersect
The buzzword digital transformation has been thrown around technology circles for about the last eight months. In unified communications, digital transformation largely refers to embedding communications into business applications, especially for customer-facing services.
Organizations can do this integration via communications platform as a service (CPaaS) and its accompanying APIs. The worldwide voice and text-messaging CPaaS market is expected to grow from $867 million in 2016 to $8.2 billion in 2021, according to an IDC study. The voice and text-messaging CPaaS market is moving from a hyper-growth startup phase to a critical-mass phase, the report said.
In addition to on-premises, cloud and hybrid deployments, CPaaS is yet another approach to unified communications, said Rich Costello, an analyst at IDC. While CPaaS carries some clout, Costello said he envisions organizations employing a mixed-bag approach to UC, with some on-premises services, cloud and CPaaS.
"There's some robust growth numbers, but it's pretty nascent," Costello said. "Usually, you get high numbers around nascent technology. I don't see CPaaS being the be-all-end-all approach."
CPaaS demand is driven by mobile enablement, cloud consumption and businesses' desire to create differentiated customer experiences, according to the CPaaS report, which was authored by Costello's IDC colleague, Mark Winther.
Hybrid approach: The best of both worlds?
As enterprises weigh their cloud and on-premises options, a hybrid deployment of the two might make the most sense. But fusing these two worlds in a hybrid setup poses its own challenges, especially when integrating back-office systems.
Additionally, hybrid deployments can be tricky, depending on the business vertical and finding the right migration expert with solid experience. Deciding what UC applications to put in the cloud can also be a challenge. In that regard, approaches can vary, Costello said.
Rich Costelloanalyst, IDC
Organizations will need to identify certain workloads that could be well-suited for the cloud, such as email, data storage, voicemail or unified messaging. In the early days of the cloud, Costello said, customers preferred to keep telephony on premises. While many organizations still have telephony on premises, they might start to rethink that strategy as the cloud matures and they need to scale.
Beware churn rate and 'Day 2' challenges
When considering UC cloud providers, Costello said, organizations need to heed the vendors' customer churn rate, which is a key indicator of how well the provider is performing. Ask vendors how good they are at retaining customers and keeping them happy.
If a provider has a high turnover rate, you'll realize there are problems. If the provider has a low, single-digit churn rate, the vendor is probably pretty good about retaining customers on a month-to-month or year-to-year basis.
Going forward, if organizations move to the cloud, Costello said, they need to watch out for "Day 2" challenges, such as ensuring voice reliability, quality, functionality and security. Namely, make sure cloud providers deliver on their promises after the deployment and offer sufficient customer support.
"Service providers have to be able to support customers," Costello said, "and I think that's the next perspective we need to measure."
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