A year after Bill Gates introduced Microsoft's unified communications platform, OCS 2007, in San Francisco, Microsoft announced OCS 2007 Release 2 (R2). For the past couple years, Microsoft has been saying that the communications industry would be fundamentally transformed by the power of software, and we’re beginning to see the truth in this statement. Microsoft isn’t the only company moving voice capabilities to software platforms, and every vendor analyst conference I attend focuses a good deal of attention on the role of software in the voice world, with each vendor noting that they are no longer hardware vendors, but software providers.

For the past several months Microsoft has been relatively quiet, with not much news coming out of the UC group. But just because they were quiet doesn’t mean they weren’t keeping busy. In fact, Microsoft has been building up its collection of user case studies, demonstrating the breadth of OCS implementations, with a focus on ROI. Also, more and more companies were implementing OCS not only for its enterprise-grade IM and presence capabilities, but for its voice capabilities as well. Within Microsoft, 36,000 workers no longer use a PBX, and rely on OCS for their enterprise voice capabilities. Stephen Elop, Microsoft Business Division President, noted in a video that he has been “blown away by what we can do already” in terms of enterprise voice. He added that tens of thousands of people are using OCS as their only voice solution, and hundreds of companies are on the path to leapfrogging outdated PBX technology. Elop stated, “They see the IP PBX as the electronic typewriter of enterprise voice and are betting on UC for their future.” Over half of Fortune 500 have already licensed OCS and have it interoperating with their existing PBXs. While this may be true, I would love to hear from more people who are using OCS without a PBX. The only companies I’ve spoken with that have done this are small, technology-savvy companies that don’t need extensive PBX capabilities. I hope that Microsoft will produce some case studies illustrating how companies of different sizes and in various vertical markets are using OCS voice – then maybe I’ll be more convinced that OCS is ready to replace the switch (as opposed to running alongside it).

OCS 2007 R2 fills in the gaps of enterprise voice requirements, bringing forth the power of software-based communications. According to Eric Swift, while the first release provided 71% of the 35 most common calling features that enterprises need, R2 fills in the gap, providing an additional 17% of those features (the rest will be added in 2010). The new enterprise voice capabilities added include Communicator Attendant, ACD (Response Group), Single Number Reach, delegation, call monitoring, and SIP trunking. New mobility capabilities will extend the enterprise dial plans to cellular calls, enabling users to press click-to-call from their cell phone and have OCS call them and the other party to set up the call. The recipient will see the caller’s corporate phone number, rather than their cell phone number.

Another cool capability is Communicator Attendant, a call management application for team assistants and front-desk receptionists who can use presence to manage conversations and provide more efficient service to callers. The team assistants/receptionists can manage incoming calls and use presence to transfer calls to the right people in a way that is more effective than the deskphone button and lights approach. For example, when an attendant receives a call, they can make notes and attach the notes to the call when the call is transferred to someone. Attendants can see the presence of individuals and can send someone an IM telling them that a caller is on hold, and then transfer the call.

R2 also adds desktop sharing, High Definition Video, group chat, and an audio conferencing bridge. Dial-In Conferencing provides an on-premise audio conferencing bridge, helping customers to save on conferencing costs by setting up an on-premise audio-conferencing bridge for both internal and external users. Dial-In Conferencing supports VoIP and/or PSTN dial-in, a conferencing attendant, and scheduled or reservationless conferencing, and provides direct integration with Outlook.

One of the other big pushes in this announcement is communication enabled business processes (CEBP). Microsoft’s vision for CEBP is to enable the transformation of business processes by embedding real time communications into applications. By having communications embedded in business applications, communications can be available in existing line of business applications. Microsoft states that, “Users can access communications capabilities like IM/presence and click-to-call from within the business applications that they are familiar with.” R2 provides APIs and web services for presence and call control, enabling application developers to communication-enable applications. Microsoft is providing an agent dashboard for its Dynamics CRM, and one of Microsoft’s key partners, Aspect, is adding this capability to the Aspect Expert Finder application. In addition, Microsoft is providing Communications Enabled Business Workflows tools for creating new business applications, enabling ISVs and corporate developers to create new communications-enabled business workflow applications using familiar development tools. Microsoft has a huge number of ISV partners who can now embed communication capabilities into their applications, making them exponentially more effective.

What does all this mean to traditional switch vendors? The message to PBX vendors is that today OCS sits alongside the PBX and has complementary capabilities, although some can be substitutes for what the PBX offers. While Microsoft doesn’t yet offer all of the required PBX features, Swift notes that by 2010, users won’t need a PBX anymore, and OCS will provide all of the necessary functionality for most users. As far as the future of the PBX vendors, some will continue to build a full UC/voice platform, while others will build on top of platforms like OCS, and some will focus on developing vertical solutions. There’s also the opportunity to add contact center capabilities to OCS, which does not provide any of its own (although Microsoft has a partnership agreement with Aspect, as well as other companies like Nortel, which provide contact center capabilities). Certainly there will continue to be a role for telephony vendors in the foreseeable future, and unlike many of my colleagues, I don’t see the death of the PBX in the near term. But these vendors will need to evaluate where they add value and where they should throw in the towel and work to leverage the capabilities of companies like Microsoft, IBM, and Cisco. Ouch!