Transcript for UCStrategies Discussions: PBX Augmentation or Replacement, and Premise vs. Cloud (or Hybrid)
Phil Edholm: Hello and welcome to the UCStrategies podcast. This is Phil Edholm and I will be hosting your podcast today. Today we are going to focus on a couple of exciting topics, what should you consider when considering a PBX augmentation or replacement. And the second topic, what should you consider when you look at cloud versus premise versus hybrid deployment. I know these decisions and what’s to decide is tough. For example at Enterprise Connect earlier this year I did a session on Lync versus Jabber, How do you Decide?, and I’ve actually had almost 400 people ask for the decision tool that came out of that presentation. I know a lot of you are being asked, how to consider, what are the considerations, and what should you do?
We are going to start off first with PBX augmentation or replacement. When deploying UC, you can either augment your existing PBX, for example, deploy Lync and keep your existing PBX in place. Or you can decide to replace the entire PBX with a new voice over IP UC solution for everyone. So first off I would like to call on Marty Parker, and Marty has done a lot of work in this space and actually has some data from the RFP responses that he has analyzed relative to augmentation versus replacement.
Marty Parker: Great Phil, and thanks for bringing this topic to the fore, it’s really an important topic. I am going to begin by making the point that unified communication value accrues by addressing improvements in how people work and how business processes flow. That’s why we’ve called unified communications for the past six years, Communications Integrated to Optimize Business Processes. So as an enterprise starts looking at their usage profiles, let’s say field sales or field service or product development or marketing or care delivery in a hospital, whatever, they will find that there are specific types of UC tools that are needed within each of those usage profiles. Which leads to just an ideal situation for bringing the unified communications technologies in for that group of people without touching the PBX.
Sometimes that group of people needs to use a desk phone, but in many cases, like a field sales organization, they don’t even see a desk phone; it is not part of their daily life. They don’t think of it. They use their cell phone and their tablets to do their job. Same thing with business processes; if the business processes are flowing along following applications such as a CRM application, a salesforce.com, a Microsoft Dynamics, those kinds of products, SAP... you notice SAP is now investing in communications just like Oracle is so that they can build communications into those business processes. That’s not going to require touching your PBX.
At Enterprise Connect when we do three parallel RFPs, one of the RFPs that we do each year, the one that I lead, is asking the vendors to tell us what would it cost to connect to your unified communication solution into the enterprise, connected over to the PBX through SIP trunking or standard trunking or gateways. But do it in such a way that I don’t have to change out the phones and the PBX. And what we see, and you can see my article posted on UCStrategiesabout a week ago (UC Overlay Approach: Big TCO Winner for Enterprises) is that the cost for that overlay approach is roughly half of the costs of replacing the entire PBX.
By the way, our total cost of ownership model includes the cost of continuing to maintain your existing PBX. So we’re not saying the UC solution without the PBX, we are saying the UC solution overlaid onto the PBX. And others are going to talk later about whether that solution can be in the Cloud, for example, our RFP was on Premise. The thing you find is not just that you save money, but you save time, because that overlay can probably be tested and implemented in less than six months, whereas any client we have who has more than a couple thousand employees has a hard time making a whole PBX migration in less than about 18 months across multiple locations. So, you save a lot of money and you get to the benefits a lot sooner.
Now some might argue “well, this will be complex.” You are going to end up with that same complexity even if you replace your PBX with a new one because there will be a coexistence period. In the enterprise class companies with multiple locations and thousands of employees, there will be that need to coexist – the new solution and the old will have to coexist. So you will have to go through all that integration anyway, and if the overlay that you are using is from Microsoft, say Lync, or from IBM, say IBM Connections and Sametime, your shop is already dealing with them for email instant messaging, collaboration applications, content management, sometimes business social. So there is no operational complexity on top of this; it is really a matter of getting to the benefits faster and spending less. And since return on investment is time driven, the less you spend and the sooner you get the benefits the higher the ROI goes. So with that Phil, I’ll say it’s both an economic and a business results argument. And of course you know I am a champion of taking a look at that idea whenever you are making a UC investment.
Phil Edholm: Excellent point, Marty. I am actually at the Society of Telecommunications Consultants annual meeting in Snowbird, where it’s snowing, by the way. One of the consultants made a very interesting comment. He said that many organizations reduced their staff; the staff is pulled so thin that the only thing you can get considered is something that has a six-month payback. I think your point is, you can get the benefits of UC without the complexity of replacing the PBX. Especially for organizations where the percentage of users/knowledge workers that immediately use some of the UC functionality may not be a large percentage, it is an obvious win.
Marty Parker: Exactly.
Phil Edholm: Great points. Art Rosenberg, you wanted to talk a little bit about process integration and how that impacts this augmentation versus replacement.
Art Rosenberg: First of all I want to second what Marty talked about. It’s not just cost, but also operational benefits in terms of business process performance. But what I think is also going to be very important is that mobility and business, bring your own device kind of things, not just employees but customers and partners and so on. The way people will communicate is not so much anymore just by telephone, but messaging and different forms of messaging including social and text messaging and real time and email and so on. It’s giving greater flexibility in how people can communicate no matter where they are and not location dependent. Obviously the telephone systems have been focused on Premise based and that’s not the way the real world is anymore. So if you are talking about a business process, you have to include everybody involved in that business process and what their communication needs are, which may be different. You’re a customer; you’re a partner; you’re an internal employee or you are somebody who is on the road all the time. So mobility and multi-modal mobility is where UC is going to come into play and this is exactly where you can do the overlay. For the people who are still sitting at their desk, information workers who have a desk phone and don’t go anywhere, keep what you have. But for the people who are mobile, you can’t just use what you have, you have to bring in the new stuff. This is where UC comes in – including self-service applications that are integrated with things like WebRTC so you can click for live assistance and you bridge the gap between telephony and other forms of communication and information. So I think that is going to be a key consideration in terms of where you are going. You have to define where you are going, not where you have been, and then you can start planning implementation strategies.
Phil Edholm: Thank you, Art, that was a good insight. Roberta, I know you do a lot of work with your clients who are doing deployments and considering this. I know one of the things that you consider is the skills and capabilities of the team and ability to support these things. Tell us a little bit about that as a consideration.
Roberta J. Fox: Well, it’s interesting to listen to my fellow experts. I partly agree and I partly disagree. I agree with some of Marty’s’ points. But I think the only major exception I would disagree is unfortunately for the Nortel Blue clients, from our projects, the cost to upgrade and try to augment, particularly once you move out into 2014/2015, the cost proposed by vendors has been more expensive to augment and supplement then it was to go to totally replace and move to next generation voice over IP systems, which sounds bizarre. That’s just the approach that Avaya took. So that’s where I have my disagreement, but on the other side I agree with the guys about the fact that there are some opportunities, so I think it’s really what applications do you want to use, where do people want to work from that make a difference.
The challenges we see, what they also have to figure out is, the skills to implement means IT, telecom, vendor management, project management. You also have to look at if you’re going to change your systems, but have they been integrated to including your call centers and your SIP trunking and networks. And then the last piece, as I just said, moving to IP based and NextGen and mobility a lot of people just look at the PBX and sort of forget about the LAN or the WAN. You have to have POE-enabled switches, etcetera, etcetera. I think there are a lot of factors to consider and each case is different. But I think if you are basic telephony and you want to move and migrate, fine, as long as you are not Nortel and you want to go to some enhanced applications, I definitely think you look at replace and augment.
Phil Edholm: Thanks, Roberta. Next let’s hear from Jon Arnold. Jon’s going to talk a bit about in the augmentation versus replacement, whether you even really need to replace with a phone, or you can just get by with other devices.
Jon Arnold: Thanks – I’m glad to be able to jump in and try to add a few things here to the call. Phil, I know it’s a pretty ambitious agenda here, I think we can easily do a podcast on either of these topics, so I’m going to stick to the PBX issue, and would certainly like to echo a couple of the points Marty made, and that is the length of time it takes to actually do these things, when you are going to augment, or even replace your PBX. I’m not going to cover that ground again. I’ll add just a couple of points, one being of course, just the simple, practical issue, of the logistics of going through the process of upgrading or replacing a PBX. In other words, to keep that phone on a desk going. I think that’s a big issue that revolves around, yes, the time it takes, but of course also where you are in your capital depreciation cycle. So if you’ve got a lot of money on the books, and it’s advantageous to keep writing that thing down, then that’s probably going to dictate your decision to keep that PBX running as long as it makes sense on your books to do so. And on that level, yes, the augmentation path probably makes the most sense.
I think the replacement path is more about being driven to lower costs but with a priority to keep those phones on the desk, and I think that’s going to speak to the more traditional environments, where the IT decisions are being driven by people with a strong affinity to the phone, and I see no reason to not continue, but just on a lower cost basis. So I think that decision point comes of course when the phone system reaches end-of-life, and it’s economically and accounting-wise viable to do so.
But I’m more interested in the replacement scenario, and that is the replacement of nothing at all. And again, that’s come up with a few of the other speakers here, and we’ve all seen this happening right now. And my comment to that is, as a distinguishing point of whether you go down that path or not, I think that’s largely a generation issue, and obviously the BYOD trend is just the tip of what’s happening. And it’s really interesting how the vendors are all trying to of course keep up with a mobile form of communications, but it’s also partly because there is more momentum building towards this idea of moving away from the PC overall itself. So it’s not inconceivable to see scenarios within a few years where the desktop of our workplace is going to have neither a desk phone nor a PC. Everything is going to be driven off of that tablet environment and I think other devices are going to come onto the market that will evolve to kind of take the place of the traditional desktop, but built around the sensibilities and ergonomics and practicalities of the mobile tablet devices and the ever-evolving smartphone.
I think that’s a bigger picture scenario, but I think it’s one that is going to come faster than we realize, and that speaks to where the cloud is coming in to again, taking the infrastructure away from the IT department and then of course there’s also this whole idea of the virtual workplace. And there are so many trends that are pointing to this where we’re going to need less and less hardware and items on the desk. If you talk to SMBs, and you talk to some pretty forward-thinking even enterprise environments, there are lots of people – and Marty’s mentioned this – there are tons of people who don’t use their desk phones anymore and don’t even miss them. But when you think of what millenials are like now, they didn’t grow up more or less having a land line in their home; they’ve been totally mobile and totally internet-based their whole life, it shouldn’t really come as such a surprise to them to not need a desk phone in the workplace, either.
So I think this generational shift is going to have a big role to play in what ends up happening when those scenarios arise. And I think we will increasingly see that replacement scenario being not one to replace a desk phone with another desk phone, but to replace it altogether and do without it, and find that, you know what? We can make do pretty well with these mobile devices, and even the vestiges of what we’re going to have for the PC as we know it today. I know I’m thinking a little far out here, but I don’t think it’s that big of a leap to see a world where we’re going to be that way. And if you don’t believe me, just watch how your kids are interfacing with the computers and the internet today, and how the environment for a mobile device is changing a lot in terms of the functionality and the way it suits our needs for how we like to work these days.
Phil Edholm: Thanks, Jon. Excellent thought process. I mean if you look at it, maybe we really don’t need desk phones. So maybe an augmentation with a plan, and a few years to eliminate phones may be the right strategy for a lot of the companies out there.
One thing that’s a major consideration is to understand what employee group is going to be impacted. Knowledge workers, obviously with tools like Lync that help them in managing their day-to-day lives and doing collaboration; information workers, where you have integration to business processes. If your footprint is small, for those employees versus the general population, it probably drives you towards an augmentation. On the other hand, if you are a large consulting company where everyone is a knowledge worker, replacement may make more sense than augmentation.
So I think what we have heard is that augmentation can give you very fast pay back; makes sense for a lot of organizations. But you need to be very cognizant of staffing and integration and process integration and how those work. Ultimately it’s dependent on your organization, what you are really trying to do with UC, and of course what your installed equipment is.
With that, let’s move on to our second topic. Obviously the Cloud is a hot topic today across the industry. Literally billions of dollars of IPOs of Cloud companies with people like Facebook and LinkedIn and so on, Cloud deployment is being talked about in boardrooms as a way to reduce cost. And Cloud of course has come to communications. So a key question is, should you stay with Premise? Should you go to the Cloud? Or should you split it down the middle and deploy with hybrid? So let’s ask Steve Leaden a little bit about what his view is on Cloud versus Premise versus hybrid and what are the considerations that you should look at.
Steve Leaden: Thanks Phil. It is a very, very hot topic amongst all of our clients and most of our clients are in the thousand-plus endpoint arena. So we are seeing a lot of activity and a lot of interest. We actually had a comment from one of my CIOs from a major university last week who really thinks that the Cloud is going to go into literal takeover mode within the next 48 months and we really have to be cognizant of it.
There are statistics that show that the SMB-oriented Cloud providers such as 8x8, as an example, with their hosted solution and shared Cloud solution if you will, has grown by over 20 percent within the last year. And other companies have also shown similar growth. Obviously the Cloud is definitely gaining ground. What’s happening? Well Gartner put together a report late last year and basically said that the Cloud market – the Voice as a Service market, or VaaS, as they called it, will be a $2.2 billion market by 2015, which is pretty significant for what we call a semi-startup market.
For my opinion, it is a lot different than Centrex; Centrex, the old Cloud model that all of us have known about going back even 20 years. The newer Cloud model is really a UC-driven model so it is not just telephony, but it is all of the UC components that go into possible Cloud model. There are definitely some drivers. I did an article on UCStrategies earlier this year about the Cloud and the channel (To The Channel: Is the Cloud Your Pivotal Opportunity or Your Demise?) and some of the talking points about the drivers include technology is changing at unprecedented rates. I mean, we are seeing now more changes especially in the apps area than we have ever seen within the last 20 years. We are seeing an accelerated level of change happening almost overnight. We are seeing acceptance of the user community, the enterprise community, with UCC finally, it is gaining ground, people are interested in it. Voice as a transport, not that it’s dead, but it’s boring, it’s a necessary requirement but it’s not exciting.
Cloud has very fast ramp-up periods. We just did a CaaS solution with one of the CaaS providers for a contact center and we literally built it in less than four weeks – for a contact center that’s pretty phenomenal.
Sometimes there is minimal, if not zero cost attached to the Cloud, at least for startup. So for those clients that are looking for less dollars at least for startup, it can be very worthwhile.
The other thing is that UCC is actually in general, especially with integration now with CRM applications, which one of our clients is looking at, as well as ERP integration, those kinds of integrations can get a little complex, Phil. Therefore, if you can delegate that out to an outside party to help you with that, that seems to have some appeal. Now just like Marty’s article that was just recently posted, talking about augmentation and other strategies, Cloud does show that it is the most expensive option. But we do have a client who is actually deploying a 7,000-endpoint Cloud solution. It is a private Cloud solution, meaning that the resources, the central office, so to speak, where the system will be actually dedicated just to this particular client based upon their size. I can tell you they are an early adopter, and we are going through the pains of early adoption, but the biggest driver for them was that their business model said that they just did not want to do a lot of capital purchases any longer because of the dynamics going on with the industry. It gave them the ability to add or reduce endpoints pretty much on the fly because it’s a rental model. Finally, what they did was they really came up with an ROI (that was a study that we performed as part of it) that showed that the cost of the Cloud and the ROI attached to all of the savings that we could take advantage of would literally be a zero net-net to the client and the CFO was kind of pleased with that.
Anyway, it’s an interesting time that doesn’t eliminate Premise-based solutions at all, they’re all still very, very valid. So what we have done really, we have looked at hybrid for clients, too, Phil, by the way. And we actually have a college and a university that’s on Google Gmail, and we have a sister medical center that’s on Microsoft, because they have to apply to HIPAA rules, etcetera, which the Google is not quite there on that level. Interestingly, the university wants to look at a Cloud solution and the medical center wants to look at a Premise-based solution. We actually included in the request for proposal going out to procurement to the vendor community the hybrid solution, looking at the Cloud for the university or Premise because they wanted to look at both as well as a Premise-based solution for the medical center. The idea is that we would tie both together, we would rent the Cloud solution at the university level and we would purchase the other part of the solution for the medical center. As you can hear, there are all kinds of variations on everything and literally in the last four procurements that we are in the process of performing for clients, every one of them has asked for Cloud as an option. So the trending is towards Cloud there for sure. Back to you, Phil.
Phil Edholm: Thanks, Steve. You bring up a very interesting point that when you buy Cloud, you are renting. And unless you sign a very long-term contract you are generally renting on a short term. Many of the Cloud vendors you referenced 8x8, RingCentral, are on a monthly purchase basis. One of the things that a lot of people are saying is that the Cloud solutions will get much less expensive over the next couple of years due to competition, new technologies like WebRTC. So one of the actual interesting financial decisions is when you buy a solution, you are basically buying at a specific cost point for the next five or six years. Because of the capital you are buying the support of what you are buying etcetera. If you buy a Cloud solution, if prices in the Cloud drop by 50 percent three years from now, you are going to be paying 50 percent less. So actually one of these things that probably needs to be considered is what you believe the volatility of the Cloud market is to price reductions over the next three or four years as you look at your overall ROI and cost over a five- or six-year deployment period.
Marty Parker: It’s Marty, if I could comment on those two things... I think, Phil, you made a point that is the crucial part of this conversation – what are you signing up for? Many of the people who say that they are in the Cloud actually are not in the Cloud, they are just in a collocated hosted environment. If you take Cisco HCS Hosted Collaboration Solution, which is Cisco Unified Communication Manager “in the Cloud,” it is not actually a shared tenant solution, it is an instance of Cisco’s product dedicated to your company. And you will sign a long-term contract. And it may not look like you are investing in the capital and the operational expense, but you are. And I think while I agree with you, Phil and Steve, there are opportunities if you are looking for the generic product, if you are looking for the product that’s say an 8x8 will sell, you may be able to get a month-to-month, and you may find a declining rate structure over time. But if you are looking to have enterprise class capabilities and integration opportunities and control, privacy and security, you may end up contracting for basically... you are basically signing a lease if you think of it that way instead of a rental.
So it’s interesting – you have to do all the analysis, and Steve, I think made the point clearly that is what a consultant does for the client is they do that analysis. And Roberta made the point that results will vary depending on the situation. I am just saying do the analysis and watch the contracts.
Phil Edholm: I absolutely agree, and I think you brought up a great point, which is, Cloud is not a technology, it’s a business model, and you really need to understand the business model. If you are signing up for a three-year contract, that’s a specific business model; if it’s month-to-month, it’s a different business model. Obviously there are no guarantees the price will not go up, but conversely, there is no prohibition that the price will not go down. So all are considerations – it’s not as simple discussion.
Steve Leaden: To close that point there, we worked out a contract for that 7,000-endpoint client that we were talking about. It’s a five-year agreement, it’s not short term. It does include new technologies; we will look at those price points as they arise, but the key is that we are looking at a midterm review rate at the halfway point at month 30 to do a review on where the market’s at, so if we can take advantage of lowering price points we will look at it at that time.
Phil Edholm: Great – that’s excellence. Joseph, you had some points about why considering hybrid is incredibly important in this discussion as well.
Joseph Williams: It is – I have spent a couple of years helping vendors build hybrid solutions. I have an observation to make up front. When you actually start to talk about hybrid technologies in the Cloud space, almost everybody immediately runs to Infrastructure-as-a-Service in their thinking. And they start to talk about peak load scenarios. The Unified Communication-as-a-Service, this is not a peak load scenario. You are really talking about, as was mentioned earlier, this is a deployment modality where you are taking something and you are moving it into either a private or public Cloud for a variety of different reasons.
One of the reasons could be that you have a non-Premise PBX, you want unified communications, you don’t want to bother with it on Premise and so you want to push that functionality into a Cloud so that you have a hybrid scenario. The UC functionality is coming from a Cloud service and the PBX functionality coming from on-Premise. There is a lot of that as a matter of fact, and there are some really good offers which are being built around that.
But let me share with you some key issues that come out of this hybrid design that I have seen as a result of these deployments. The biggest thing the CIOs talk about is security so that is certainly something that has to be addressed and it’s important. But that’s actually not the biggest concern, it’s really support. So in a lot of these hybrid deployments if there is a bad quality experience actually hunting down what the support model looks like and who is responsible for what is really very difficult. These services have to be well defined in terms of not just who is responsible for what but who is going to take ownership of resolving what goes on there.
The other issues are, the cost scenarios have to be there. It doesn’t have to be cheaper, as we’ve discovered, it just has to be cost effective. Cheaper is good, cheaper is always better as a matter of fact, but if it ends up off-loading complexity, or it allows a reallocation of human resources to do something that is a higher priority so you are off-loading it to a vendor, that works out really well.
Then the other issue here that’s really imperative to deal with is control and reporting. A lot of Cloud services, for example, if you were to use Lync in the Office 365 Cloud, you really don’t have any control over what is going on apart from provisioning and some modification. Very different from HCS from Cisco, where essentially it is just a full private deployment and you are running all the administrative and control functions there. You have to be comfortable with what you are able to control and what you are not able to control. You also have to be comfortable that you may not get the reporting that you are used to with an on-Premise or strictly Cloud scenario because the reporting systems may be incompatible and not worth resolving.
The big deal with hybrid is you really have to plan for it well and you are really planning for two completely different deployment scenarios and the marriage of those, and it is difficult. All the ones that have failed, every single one that has failed, has been a result of poor planning more than poor execution. That is my nickel’s worth.
Phil Edholm: Thanks for that, Joseph. Excellent point, excellent points. With that I am going to throw it over to Roberta to talk a bit about some of those deployment issues and support issues that you’ve seen in deployment types.
Roberta J. Fox: Great, thanks Phil, and Joseph I really appreciate your comments from a vendor industry perspective as well as Steve and Marty. One of the things we found is we as customers and myself included in my migration from onsite to managed, to now 100 percent hosted Cloud, is we assume that we are able to get the same features that we always had, things like zero out, page groups, line appearance, are not always available in some of the hosted voice applications believe it or not. You get other things that trade off and supposedly make your life better, but conversely on the positive side you get some things like enhanced generation, next generation multi-media functions that can be much more easily provided from Cloud providers, and unified communication applications could be more easily installed because they were designed to be together rather than integrated.
Our concerns for clients when moving from Cloud to managed to hosted is always the integration and there are little things, Steve Leaden knows this from his project as well; little things that can just drive you nuts. Trying to get some of the SIP signaling working, trying to get synchronization between contacts and telephony, and to have the clients get what they expect from what they were told.
The last thing is that to make sure, as Marty said, that the cost up front are fully divulged and discussed and it’s not just a per-month, per-person, but usage surprises like toll free and LD that you didn’t expect and maybe the rules changed during the contract. And also as the other guys said, what are the service tasks and expectations, what reports are you going to get, what management data are you going to get; you have to have that clearly discussed and in the contract.
Our benchmark data, as my final comment, overall seems to be that based on working with some of these solutions since about 2009, is that 100 percent Cloud for organizations less than a five hundred people that want voice, UC, and contract centers, seem to be a good fit. For organizations of 500 to 3,000, if you are doing a combination of contact center in the Cloud and telephony, then a hybrid approach generally seem to be a good fit. We will have more information in early 2014 when we are releasing a customer Cloud scorecard. But I totally agree with my fellow experts, it really depends on the organizations. Definitely you have to look at the various choices, so back to you.
Phil Edholm: Thanks much. And Clark Richter, you had some very interesting points about Cloud and the deployment that is really happening to the Cloud and other applications, and how we in the communications industry should look at that as a precursor of what is coming.
Clark Richter: Thanks Phil; I really like what you said, and I want to resound that that Cloud is one of the most abused words in technology these days, but what people tend to lose perspective of is Cloud is essentially a business model, it’s not really a technology. A lot of these technologies have already existed. To that point, as a business model, I think one of the most important decisions in looking at the Cloud versus premise is to look at your own business and what matches that model best. If you think of a small growing company that is adding employees strapped for cash, the Cloud model is very attractive. You can grow as the company grows and so forth, they do not have existing infrastructure to compare it to. Whereas a hundred year old brick and mortar company that doesn’t have huge employee growth already has systems in place, most people come into the office between eight and five, they obviously have a different model than maybe a Premise type of solution, may make more sense financially for them.
One of the interesting things I saw recently in doing some research for an article I was going to publish was some actually numbers of actual adoption of some of these technologies. This came from CompTIA, this is their fourth year of doing a Cloud computing survey where they not only survey channel partners, but also end users. Some of the numbers were a little bit surprising in terms of the end-users and their adoption of different components of UC. For example, email and collaboration were nearly over 50 percent of adoption already, and they break it down by small to medium and large types of accounts. If more than 50 percent of these companies are already hosting those particular components out in the Cloud, I think it’s a natural progression to move the voice components out to the Cloud as well, where it makes it easier for them to accomplish that.
Some other things that were interesting with call center or contact center adoption was about 35 percent, and this varied from small to big. Another surprising aspect of it, was the numbers are actually lower for adoption in the smaller businesses which is contrary to what I would think, I would think those would have been the early adopters of this technology just because it makes a lot more sense on the surface. Then ERP was only about 28 percent out in the Cloud so you can see what those two big components as part of your solution that may hold you back from moving out into the Cloud.
So I think first and foremost it is a business model; the Cloud, if it makes sense for your business to go to that, that’s what drives it more than anything. Obviously there are a bunch of benefits to it as well as negatives to it. But the second point I wanted to make, and some people have touched on it, but I think a real big consideration of the Premise versus Cloud is really at your internal users or your employees and what their preference is. Going back to a couple of examples, if you are at that younger company where your employees are the millenials, so to speak, and you try to take a 22-year-old who just graduated from college and put him in front of thin client terminal and a phone, they are going to pull up their smartphone and start looking for a job. You have to give them a flexible work environment where they can work on the types of devices that they prefer. That may lead you more to a Cloud type of environment.
Phil Edholm: Excellent, points Clark. Before we close, are there any final comments from the UCStrategies experts?
Art Rosenberg: Yeah Phil. I just wanted to make one comment – it’s something that’s evolving, it’s not going to be overnight, and that is the fact that business communications will be initiated not so much person-to-person anymore, but it will be initiated contextually from information, from a document, from a message, so people won’t say, “I’ve got to know their phone number and I am going to call them.” They are looking at information; they are looking at the other forms of communication, and within that context they are saying, “I need to talk to that person, I need to discuss it.” It doesn’t mean that they are available, because presence will tell you whether or not they are available and then they can just at least establish contact with the person, notify them that you do want to talk, and they will get back to you when they can. So it’s not this on-demand, ad hoc, people have to be ready to talk; that world is slowly but surely going to disappear, just not overnight. So you still have to deal with what you are doing today, but this is where we are going. And as a result this is why you want to have integration of all forms of person-to-person communications with business process applications.
Phil Edholm: Excellent, excellent point. I think that I will close and encapsulate what I heard today, which is both of these are viable options. You need to understand your organizations, your drivers, your needs, your configuration, your people. So in other words, communications, unified combinations, collaboration, while it’s getting more and more powerful is also more of a challenge to choose exactly the right solution in your organization.
But I will close with one thought. I do know one organization that for example, in Cloud, should choose Cloud. 8x8, in one of their conference calls, said that they had 2.1 percent per month churn of customers that left their solution. And they said that 50 percent of those were companies that went out of business. So I guess the one message is that if you are a very small company and you are not sure if you are going to be in business in six months, you probably should choose the Cloud. So with that we will close and wish everyone a great week until we talk to you again next week. Thanks.