A range of small and large communications vendors are shifting their services to cloud-based delivery, giving customers the choice of having hardware that sits on their own premise, or accessing PBX and other unified communication (UC) platforms that are hosted by the provider or a third party. But some analysts say slow customer adoption points to customers being more concerned about managing their workers' mobile devices compared to traditional boxed communications systems.
Communications systems that are hosted off-site or through a cloud offering are not necessarily new, says Forrester analyst Dan Bieler, but there has been a market progression during the past few years from managed hosting to cloud services. Cloud-based services are a next generation of hosted or grid computing, he says. Unlike a managed or hosted service, cloud offerings have a pay-per-use model, with the ability to scale up or scale down, and they're offered from a multi-tenant environment. That compares to a managed or hosted service, which is built to peak demand for individual customers and usually has dedicated resources for individual users.
Many of the big players in enterprise communications have some sort of strategy related to cloud offerings, including Ericsson, Microsoft and Cisco all pushing cloud products with "good momentum." "That inertia isn't always translating into sales though," Bieler says. He estimates that 1 in 10 enterprises use cloud-based communications services, a figure he expects will grow in the future. "It's not a mass market yet," he says. Where there is movement, he says, it's normally not for cloud-based voice services, but instead for an entire UC platform, which includes video, instant message and presence -- or allowing workers to see if other users are actively online.
Moving to a hosted or cloud-based offering can create savings that are commonly associated with the cloud, including making the system an operating expense rather than a capital expense and easier management for the user. A voice over IP (VoIP) can yield some savings in terms of international roaming and some increased capabilities but these savings vary depending on the customer, Bieler says. On the UC side, there is slightly more of a demand for cloud-based offerings because there is a larger infrastructure demand for such systems, which can reduce costs for the user if the system is hosted off-site.
Some vendors report slowly and steadily increasing interest in cloud-based solutions. Jamie Fichter is vice president of systems engineering at West Interactive, which advises clients on enterprise communication platforms while also offering a set of UC solutions. Over the past few years the company has increased its cloud-based delivery options for customers and he's seeing increased customer interest. "We're sticking our feet in the water," he says. West Interactive will work with customers to deploy cloud-based or on-premise communications systems.
Some customers are attracted to the reduced on-premise footprint the system allows, eliminating a server in their data center that needs to be cooled and powered. Overall though, Fichter says customers are generally curious about the possibilities. "It's still a little nebulous at this point though," he says.
Even as West Interactive moves services to cloud-based formats and customers become more comfortable with the idea, Fichter says in most customer installs some sort of on-premise function is still used. "Nothing needs to be done on site, but for a variety of reasons something usually ends up there," he says. For example, if one site needs to be more highly available than others to support a contact center, if traffic patterns indicate it would be more economical to run through an on-prem setup, or if the customer has concerns around security or compliance, then a hybrid approach that combines hosted and on-prem systems is commonly used.
One reason for the slow adoption of voice-based cloud solutions is that there are already affordable market alternatives not in the cloud. "Voice is getting cheaper by the day, you don't have to do a lot to get a better deal in the market," Bieler says. Cloud-based services need some differentiating feature that makes them an advantage over traditional systems for them to further catch on in the market, he says. Vendors are working on that.
RingCentral has been a cloud-based PBX offering since 2009, and claims to be one of the first in the market. The company has never installed an on-premise PBX for a customer -- all of the company's services are hosted in one of two data centers the company owns on either coast. The complete replacement of a PBX system is ideal for some customers that are looking to upgrade their systems, add capabilities or reduce capital expenses, says Nisha Ahluwalia, VP of product marketing for RingCentral.
Another differentiator, she says, is around user functionality. Calls can be adjusted in a Web-based application to ring on any number of devices, with priority being set to which device will ring first while preset voicemails can be changed with the touch of a button. "It's anyone's game," she says. "It's up to us to keep providing these solutions. So many services are going to the cloud, so I don't see why phone systems should be left behind."
But Bieler says the slow market adoption tells him that enterprises have bigger worries than moving to cloud-based PBX or even UC solutions. "There is some movement on the UC side, but there are other issues further up on the agenda," he says. Collaboration is becoming increasingly important as enterprises consider what sort of social tools will be used to allow for communication within the enterprise. Vendors are pushing those solutions hard as well, as evidenced by Salesforce.com aggressive push of its Chatter feature, for example.
The biggest urgency though, he says, is around mobile device management (MDM) and the bring-your-own-device trend (BYOD). "Bring your own technology is an important part of collaboration and voice and UC are just a part of that," he says. The greater opportunity for many businesses, he says, is around solutions for managing not just the enterprise communications platforms, but now handling the deluge of devices and technologies workers bring in and want to use for work purposes.