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The experts at UCStrategies cover a lot of ground, including original market research. Blair Pleasant of COMMfusion has published several reports in the UC space, and her latest study was just released. Fellow UCStrategies analyst Jon Arnold caught up with Blair to learn more about the report, and their thoughts are shared in this wide-ranging interview, including what slacks, jackets and suits have to do with UC&C.
JA: First off, Blair, congratulations on getting this study published. It’s been a long time in the making and is certainly very timely. I’m particularly interested in the title – did this start out being UC only, with “collaboration” entering later on? We’re seeing these terms used in tandem now, but not so much a year or so ago. What’s the story there?
BP: Good observation, Jon. Yes, my previous report was titled Unified Communications Market, and while writing this report, I realized that it needs to include collaboration in the title. I’ve always seen collaboration as an element or component of UC, and not something separate, but there’s been a move by companies like Cisco to focus on collaboration rather than UC, and most vendors now refer to their products as UCC. Collaboration is getting more attention than UC in some cases because it’s something that people understand. Somehow it seems easier to vendors and businesses to focus on collaboration rather than unifying their communications, which can be more challenging.
JA: You’ve already had some nice coverage for the study, and before we get to some of the finer points, what would you say is the main problem set that defined the scope of your research?
BP: It wasn’t really a problem set, but rather a way to solidify what I’ve been seeing in the market in order to help end user organizations, vendors, and channel partners understand the market, the market dynamics, trends, and future directions, in order to help them as they develop and fine tune their strategies. As an industry analyst focused on this market, I’ve written many blogs and articles, and presented at many conferences and end-user road shows. I wanted a way to provide a source of information on UCC in a single, comprehensive report that could be a valuable resource to people.
JA: UC certainly is a moving target, and you’ve adopted the UCC moniker now. Is this the way we need to be thinking about UC now? Along those lines, to what extent is “UCC” a construct in the mind of vendors, consultants and analysts versus how the IT community is looking at this?
BP: I actually prefer the term “collaborative communications,” which is the next step of UCC and encompasses UC, collaboration, video, and social software. UCStrategies defines it as the use of communication tools to let individuals and groups that are physically spread out work together in order to produce a business goal or result. We look at it as a way that dispersed groups of workers can work together using not only conferencing tools but also more advanced collaboration tools like file and document sharing, whiteboarding, and more, as well as social software tools. Basic unified communications tools like presence and click to connect are great, but where the value comes into play is in collaboration. For the most part, collaboration, or collaborative communications, is really the driving force behind much of UCC’s value proposition and ROI.
As far as how the various communities look at UCC, I think it’s something that the vendors, consultants, and analysts talk about, and the IT folks get it. But end users are focused on how these tools and technologies can help them do their jobs more effectively – they don’t care what it’s called. The term “unified communications” or “unified communication & collaboration” is meaningless to them. However, most end users understand that they need to collaborate with colleagues, customers, partners, and suppliers, so the term “collaboration” generally resonates with them, more so than unified communications. Whatever term we use isn’t important – it’s all about what these tools and technologies can do for organizations and workers – how it lets them be productive while mobile, how they can find the right expertise and easily communicate with them via any channel, how it can reduce the amount that they have to travel and be away from home – these are the things they care about.
JA: Your research concludes there’s a bright future for UCC, but the growth curve has been choppy at best. What’s the best thing that could happen today to accelerate UC adoption, and conversely, what could derail it?
BP: A good economy! The UC market was picking up momentum in 2008/2009, with lots of excitement and new products. Things just started getting rolling when the economy took a dive, and IT budgets were cut and expenditures were put on hold.
To accelerate market growth, the key things that are necessary are interoperability between different vendors’ products and services, as well as solutions that are simpler and more cost effective. That’s why many organizations are starting to turn to hosted services – they sell the value in UCC, but don’t necessarily want to incur capital expenses, and instead can subscribe to services on a monthly basis.
Things that could derail UC adoption include a further economic downturn, and a disruptive technology that would reduce the need for today’s UCC solutions, such as WebRTC. The business communications model is changing, as workers use their own mobile devices rather than a corporate PBX and desk phone, and organizations turn to hosted services rather than premise-based solutions. I can foresee a time when communication and collaboration capabilities will be built into the business applications we use, including the social software applications, and the need for sophisticated call servers with lots of features disappears. We’re already seeing the decline of the desk phone, with more and more companies opting for softphones or UCC clients and headsets.
JA: It’s still not clear to me how much UC/UCC is a vendor-driven solution versus a more organic scenario driven by unmet or evolving needs from enterprises and SMBs. What’s your take based on the research?
BP: Again, it’s terminology. Users aren’t clamoring for “UCC” per se, but they are looking for tools to help them be more productive and efficient, whether inside or outside of the office, while CXOs are looking to reduce costs and increase revenues. Enterprises and SMBs are looking for ways to enable the mobile workforce and to better collaborate and interact with customers, partners, etc. The end-user organizations I talk to that have deployed UCC generally see the value in how these technologies can help workers make better and faster decisions, speed up business processes, provide better customer service, and generally improve their business. That’s why the vendors and resellers that focus on the customers’ business needs and goals, rather than the technology, are succeeding.
JA: Speaking of enterprises and SMBs, how would you characterize each set of needs? Where’s the common ground for UC, and where are the specific opportunities vendors should focus on for each of these markets?
BP: Both enterprises and SMBs have the same goals – increase sales, reduce costs, and improve customer relationships. Regardless of size, all companies today want to improve employee productivity, provide better support for remote and mobile workers, and of course, help improve the speed of communications inside the company, and with partners, customers, and suppliers. The differences are primarily in the resources they have available to them, and the types of solutions they’re looking for. SMBs generally want solutions that are cost effective, simpler to implement, maintain and manage, without requiring a large IT staff. A more relevant differentiation may be whether or not they have remote workers and offices or branches in various geographies, rather than their size. Collaboration is different for companies that have one central location, rather than offices around the country or the globe.
For SMBs, vendors need solutions aimed specifically at SMBs, not downsized enterprise products with enterprise price tags. The SMBs I speak with are looking for an all in one, end-to-end UCC solution with telephony, conferencing, IM/presence, mobility etc. as part of the solution on a single appliance or in a single software stack. These are generally easier to implement and manage – which means you don’t need a large IT department.
JA: Let’s get a bit more specific now. You’ve made it clear how difficult it is to size the UC market. Tell us a bit more about why this is so, and what you learned from the research in terms of coming up with a credible metric.
BP: There is no agreed-upon way to measure the UCC market. It’s not like the PBX or voice mail market where you can count the number of ports shipped, the number of phones shipped, etc. No two vendors view UCC the same, but more importantly, many of the UCC components are software solutions that are being bundled together. Some vendors offer UCC clients for free with the UCC server, others charge for the clients, or some will charge for the mobile client but not the desktop client. Some vendors provide all of their customers with UCC clients, but it’s difficult to identify how many of them are actually deployed and used.
I determined that in order to be considered a UC solution, several things must be present: Integration with voice capabilities, in order to provide functions such as click-to-call or click-to-conference; presence, and a unified user interface, or UC client. One of the ways I measured the market was by looking at the number of UC clients shipped. I also measured what I call the Total or UC-Capable Market and the Net or True UC market.
JA: Tell me more about the “true” market for UC and explain the “true” concept a bit more.
BP: The issue is, how do we determine when something is part of a UCC solution, or if it’s a standalone product? Let’s look at unified messaging. UM is one component of a UC solution, but not every UM system sold is implemented as part of a UC solution. UM has been around for years and is not inherently UC. The same is true for enterprise IM systems. Some companies that have purchased and installed corporate premise-based IM systems are using them on a standalone basis, but not as part of a total UC solution. Here’s my analogy - if someone purchases a pair of slacks, as well as a jacket to wear with the slacks, should the slacks and jacket be counted as a suit? If the slacks and jacket come from the same designer, does that make it a suit? When looking at the UC market, if someone purchases an IP PBX and a conferencing/collaboration product, even if they’re from the same vendor, does this constitute a UC sale? Not necessarily. So do we count every presence/IM server sold as a UC sale? I would say no.
By adding up the revenues from all of the UCC components shipped, we get the Total or UC-capable revenue, which includes revenues from UC component products regardless of whether they are used on a standalone basis or as part of a UC solution. From that, I calculate the portion of those component revenues that are used as part of a UC solution, which is the Net or True UC market. The difference in revenues between the Total UC-capable market and the Net or True UCC market means that there is a huge opportunity for UCC vendors and resellers to seize upon. The difference between these numbers shows that there is a large untapped market for UCC products and services, with many customers that have elements of a UCC solution but not complete solutions.
JA: You and I are both aware of the many branches of the UC tree that go beyond telephony and the PBX – mobility, video, presence, SIP trunking, social media – just to name a few. If you had to pick one of these that add the most value in getting beyond voice with UC today, what does the research point to?
BP: My research shows that conferencing and collaboration are growing the most, with the highest compounded annual growth rate. More and more companies will be deploying collaboration tools such as web conferencing, document sharing, desktop video, etc.
Mobility obviously is what’s driving many UCC deployments, but mobile capabilities such as single number reach and mobile clients are being bundled in with the UCC server, so it’s difficult to identify the revenue attributed to the mobility capabilities.
JA: Let’s crystal ball a bit. We’re comfortable with the idea that desk phones will eventually disappear, and that collaboration will be built around video rather than voice. Where does this leave the vendors we know so well?
BP: The “traditional” telephony vendors have been evolving as the market changes, and I think they all realize that things are changing, and their business models have to change as well. Every vendor now considers themselves to be a “software” vendor, even if they still sell voice servers and desk phones. Regarding video in particular, they’ve either added video capabilities to their portfolios, or have made it easier to interoperate with third-party video solutions. Some vendors are adding social capabilities, while others are adding APIs and plug-ins to make it easier to integrate with other social software applications.
What we’re going to see is the vendors focus on ways to differentiate themselves, such as in professional services, vertical applications and application integration. There will also be a focus on ease of use, as well as an enhanced user experience. However, expect to see a fall out, and several of the vendors in this space today will not be around in their present form in 3-5 years.
JA: To wrap up, I’ve been asking all the questions. What else would you like share with our readers about the study that they should know about right now?
BP: When looking at vendors, end-user organizations have many options, with many factors to consider, and it can be overwhelming. Recognizing that each vendor has areas where it excels, I came up with vendor leadership evaluations in a number of areas that I believe are important for customers to consider when selecting a UCC vendor, and to help differentiate the vendors from each other. Based on some of the factors that may be important to customers, this can help identify vendors that they may not have considered.
This market study has been a work in progress for a long time, and I hope that it helps organizations – whether enterprises, SMBs, vendors, or resellers – with their UC strategies and future plans.
Also on UCStrategies.com on this topic:
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