2014 – The Playoffs for UC Vendors
OK, the preliminary rounds are over in the Unified Communications marketplace. Through both internal development and acquisitions, there are a dozen or so players still standing, according to the 2013 Gartner Magic Quadrant for Unified Communications. It was 13, but then Mitel bought Aastra.
All of these dozen have assembled a portfolio of technology that enables them to deliver the essentials of UC – Instant Messaging and Presence, most with good federation; Voice and Video over IP (VoIP); conferencing with voice, document sharing, and video (in that order of importance); varying degrees of support of the range of users' mobile devices (tablets, smartphones); and some form of application integration to provide Communication-Enabled Business Processes (CEBP). E-mail is the wild card in this list – only two of the top 12 (Microsoft and IBM) have significant positions in that crucial category; the others offer various forms of UC plug-ins to those e-mail environments as well as to Gmail.
So, what will the UC playoffs look like in 2014, 2015 and 2016? Here are some predictions of the important factors for the playoffs, in order of importance:
- Ability to “make a compelling case” beyond VoIP. Most of the savings from the easy stuff has already been used up as justification for sales in the past 8 to 10 years. Savings in telecom costs via centralized SIP trunking, savings from converging voice and data networks and related help desk staffing, and savings from virtualizing the server platforms have pretty much been realized in most organizations, at least where those savings were practically available.
Compelling justifications will now have to come from changes in the operational areas of the enterprise. Can customers be better served with less communications-related labor and facility costs? Can internal workflows be streamlined so that transactions flow more efficiently and, again, with communications-related labor costs? Can the creative parts of the enterprise perform their collaborations more quickly, speeding decisions while potentially reducing the consumption of scarce and high-cost talent in the collaborative roles? Can work be shared seamlessly, and with minimal communications-based “friction” across geographies and even across enterprises?
These compelling cases can’t be “invented” in the UC vendors’ engineering labs. Rather this will be a test of how well the vendor knows their customers and their customers’ operational functions, or how well they can teach and motivate their customers to find these compelling cases on their own. Some vendors, notably IBM with their industry marketing model, already work this way. Others will struggle to deliver more than reliable “dial tone” and related core communications technologies.
- Application integration with business apps. Many of the compelling cases mentioned above will depend on communicating in different ways and communicating with the least delay. Presence is going to be huge in this area, since it can take much of the delay and waste out of communications by eliminating calls to persons who are not available. But, presence is even more powerful if it is built into the applications the user is already using. These can be either:
- Generic business apps which are the basis for the users’ minute-by-minute tasks. The list of these generic business apps includes such applications as e-mail (Outlook or Gmail or Notes), document creation (Microsoft Office or Google Docs), collaborative workspaces and social networking (such as SharePoint, Quickr, Google Docs, Connections, Yammer, Jive, etc.).
- Specialized business apps that are used in specific functions or vertical markets. This list includes well-known functional categories such as Salesforce.com, SAP, Microsoft Dynamics, and many more, to a long list of industry-specific applications such as Electronic Health Records (Cerner, Siemens, Epic, et al.) or Learning Management Systems (BlackBoard, Canvas, Sakai, et al.) and many others.
The generic category is an un-level playing field, since both Microsoft and IBM have solid positions in the generic business apps category. So, the specialized business apps category may offer much more leverage in the UC playoffs, since any UC vendor can create solutions, either in their labs or through partners and customers. However, there will be challenges in that area, too, since the specialized business apps vendors are already building communications tools directly into the apps as illustrated by Saleforce’s Chatter, SAP’s contact center, or Oracle’s Beehive suite.
It is important to note that some vendors are better at application integration than others. It’s worth a close look at the richness of the API and SDK suite of each vendor, the community of developers who are prepared to use that API environment, and the demonstrable evidence in the form of UC applications already available for each vendor’s UC platform.
Sales motion and channel readiness. The ability to make the compelling case based on integration with business apps will depend greatly on the ability to start the sales cycle in the business solution zone, rather than in the core UC technology zone.
The sales motion, which is delivered by the channel partners, needs to be an argument for IOR (Invest on Return), not ROI (Return on Investment). The compelling case has to begin with identification of the business improvements (the “return”), for which an appropriate set of investments is justified.
The market for simply “replacing your PBX” isn’t really part of the UC marketplace, but even then, the PBX replacement market is shrinking, as prices come down and software lifecycles get longer, through regular upgrade releases.
As noted in commentary on the Gartner Magic Quadrant (see link above), channel preparedness and channel coverage is a challenge for most UC vendors. Channel readiness will certainly be an important factor in the UC playoffs.
Support for preferred mobile devices. This is definitely a major factor, since UC is increasingly being consumed on mobile Wi-Fi devices. Most vendors have some capabilities for most relevant mobile devices. Now that the market has settled on Apple, Google Android and Microsoft Nokia as the dominant device software options, this should be fairly easy to sustain.
Yet, it is important to note that these mobile devices, especially in Wi-Fi mode, no longer need to be associated with a telephone number, just with a user account. The portion of the UC vendor community that started from IP PBXs does not seem to have fully understood this yet, or maybe is just unwilling to embrace this idea. But is it is a crucial idea for the playoff round. You don’t need a phone number for presence, IM, conferencing (other than dial-in access, but that’s not a user phone number), peer-to-peer communications, or communications from a web page or mobile app.
A few vendors have some significant advantages here, but overall this will not be the most important factor in winning the playoff rounds.
Financial Staying Power.
Finally, the vendor has to stay in the game, and the market has to believe the vendor
can stay in the game. Gartner’s UC Magic Quadrant highlighted this, per the commentary above, so no need to repeat. But we have already seen consolidation; will there be more?
These will be interesting UC Playoffs. The winners get more share, more profits and the ability to play on in future seasons. The stakes are high, so the battles should be intense. We look forward to being there with you. Please let us know what you think about how the UC market is shaping up for the future!