Does Bundled Pricing Slow or Accelerate UC?
There were some interesting takeaways from my session, “Unified Communications Options: Who’s Offering What?” at Enterprise Connect Orlando 2011 two weeks ago. That session highlighted the status of the UC product offerings from 12 leading suppliers of voice, e-mail and collaboration systems. As often is the case, there was some good news and some not so good news.
The good news takeaway is that we asked the twelve vendors to bring UC case studies this year. All but one came with one, two or even more cases. While 21% of the case studies emphasized IP Telephony (VoIP), 79% were pure UC, not phones or call centers. Looking at those case studies across the four UC categories included in the “UC RFP,” 12% emphasized Presence and IM, 12% emphasized Conferencing, 21% emphasized Mobility, and an astonishing 35% emphasized CEBP – Communication-Enabled Business Processes.
This is really good news, since it shows that UC has traction with all the vendors. It also shows that our 2006 UCStrategies.com definition of UC as, “Communications integrated to optimize business processes” was right then and even more correct now. While UC can save some telephone tolls and cut travel and facilities costs, the big benefits come from improving the business by removing the communications bottlenecks of pre-UC technologies.
But the not so good news was that in most cases, UC has been bundled into the IP Telephony offers of most vendors. Of the nine (9) IP Telephony (or Voice Over Internet Protocol – VoIP) providers, not one of them offered the non-VoIP Unified Communications functions separately from their core VoIP Platform. While there were various pricing models for the UC features and, in most cases, additional (albeit, often virtual) servers, those UC software modules depended on having a current version of the core VoIP system licensed and installed.
In most cases, this is an architectural requirement, not just a pricing policy, since often the IP PBX directory is required for the user accounts, which are tied to the telephone number to which the feature licenses are associated. In some cases, the SIP (Session Initiation Protocol) services needed for the UC functions (conferencing, mobility, CEBP) are also provided by or linked to the core VoIP system.
There’s nothing wrong with that, per se, but this may tend to slow the growth of the UC market. So far, the move to IP Telephony has not accelerated the replacement cycle of PBXs, which seems to remain at the historical 10-year average. So, on average, an enterprise user may wait five years for the upgrade of the PBX they are using to a version that will support the UC features.
The hope of the VoIP providers, of course, is that UC will justify the PBX replacement. This should be true, since UC has such high payback case studies and proof points. But there are other ways to add UC to a business than to upgrade or replace the PBX and it may cost anywhere from 3 to 10 times more per user to upgrade or replace the desktop phone than to just deploy UC, so that the bundled approach may be a hard sell.
The desktop players in the UC options session had a different approach. While their UC licensing can be bundled with licenses for their core e-mail, desktop and collaboration software, those other software products are not technological prerequisites to UC deployment, and the UC servers can be purchased and installed entirely separately.
So, back to the question of how bundled pricing impacts on adoption and growth of UC.
It seems that, in general, when the bundling of UC pricing into the larger license structure actually reflects a technological requirement for significant prerequisite purchases, it will slow UC adoption. Once that major prerequisite purchase is made, of course, the UC licenses are already paid up, and UC adoption can blossom; but until that prerequisite purchase is made, the UC features are not available to the location or the enterprise.
However, when bundled pricing is essentially an incentive to license the UC software, without technological prerequisites, it may accelerate UC adoption by lowering the net price to get started with UC in those cases when a major purchase has been or is being made.
We’ll need to watch and see how this unfolds. For the time being, we have proof that all the vendors are delivering UC, based on their many great case studies. Perhaps, as Gartner has suggested for the past two years, UC has really become the driver for VoIP/IP Telephony purchases and can help accelerate purchases of both solution types. Let’s hope so.
Also on this topic: UCStrategies Experts Discuss Bundled Pricing (Industry Buzz Podcast)