Cisco Vs. Microsoft. Strategic Decisions. Brent Kelly, Principal Analyst KelCor, Inc

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1 Cisco Vs. Microsoft Strategic Decisions Brent Kelly, Principal Analyst KelCor, Inc

2 Agenda 1 Introduction Product Comparison 2 Licensing and TCO 3 Roadmap/Future Considerations 4 Decision Making Aids 2

3 About The Presenter Dr. E. Brent Kelly Dr. Brent Kelly is Principal Analyst at KelCor, Inc. where he focuses on the intersection of unified communications, social media, video, cloud services and mobility. Dr. Kelly provides strategy and counsel to Chief Information Officers, Chief Technology Officers, investment analysts, VCs, technology policy executives, sell side firms and technology buyers. Previously, Dr. Kelly served for two years as Vice President and Principal Analyst at Constellation Research, Inc., and for ten years as a partner at Wainhouse Research where he was the primary author of most of the firm s unified communications reports and forecasts. Brent has a Ph.D. in engineering and serves as an elected official in his community. 3

4 The Market Reality Cisco Data Network 75% Microsoft Lync IM/Presence 60% Cisco Voice Network 25% - 35% Sources: Nemertes, Infonetics, MZA, PKE Estimates 4

5 The Challenge Cisco ~21% have both Cisco voice and Microsoft Lync Microsoft Sources: Nemertes, Infonetics, MZA, PKE Estimates 5

6 The Challenge Cisco ~45% of Cisco data Deployments could be considering Microsoft Lync for voice Microsoft This is why the Cisco vs Microsoft debate has become so important! Sources: Nemertes, Infonetics, MZA, PKE Estimates 6

7 Cisco vs Microsoft: The Collaboration Challenge 7

8 End User Organizations Switching Toward a Particular Communications Provider Avaya, 12.9% Cisco, 22.6% Unsure/Evaluating, 32.3% Microsoft, 12.9% Mitel, 3.2% Other/Multiple, 6.5% Cloud/Hosted, 3.2% ShoreTel, 3.2% Unity (Siemens), 3.2% Source: Nemertes Research at Enterprise Connect

9 Why Choosing is Difficult In many organizations both vendors are strategic Cisco Jabber for all (requires only one telephony license) Microsoft Lync for all (often comes bundled in an Enterprise Agreement) Political Intelligent, articulate proponents for both solutions Sometimes difficult to differentiate between them Someone will likely feel disenfranchised Approaches differ Cisco: from the data and PBX world Microsoft: from the enterprise software and collaboration world Both offer a vision for the future Both approaches are valid and often resonate 9

10 The Interface is Changing From Touch-Tone Dial Single Channel 10

11 The Interface is Changing To Click-to-Call Click-to-Conference Multi-Modal 11

12 Pre-Convergence Personal Productivity Applications Business Applications and Processes Voice Apps TDM Data Infrastructure 12

13 Architectural Choice Cisco Same vendor for voice and data Personal Productivity Applications Business Applications and Processes Voice Apps Communications Platform Data Infrastructure 13

14 Architectural Choice Microsoft Microsoft for Productivity and Coms; Any Data Vendor Personal Productivity Applications Business Applications and Processes Voice Apps Communications Platform Data Infrastructure 14

15 Architectures are Different Personal Productivity Applications Business Applications and Processes Personal Productivity Applications Business Applications and Processes Voice Apps Communications Platform Data Infrastructure Voice Apps Communications Platform Data Infrastructure What do you converge: Comms and network or Comms and Personal Productivity Apps? 15

16 Short Diversion for a Personal Opinion Many innovations in the communication space over the next 10 years will integrate personal productivity, mobility, and multi-modal engagement with business applications. Personal Productivity Applications Business Applications and Processes Example Best in Show 16

17 Comparing Portfolio Capabilities Basic Telephony Services Desktop Phones PC Clients Mobile Clients Audio Conferencing Contact Center IM/Presence Web Conferencing Federation Services Outlook Integration Peer-to-Peer Video Multipoint Video Room System Integration With Partner Eco-System Source: PKE Consulting 17

18 A Closer Look: Giving the Nod Microsoft Lync Cisco UC/Jabber Telephony Capabilities Basic Features Advanced Telephony Features Audio/Web Conferencing Video Portfolio Single Vendor versus Eco-System Desktop Applications Integration Exchange/Outlook Office Apps SharePoint Federation Line of Business App Integration Contact Center Source: Adapted from PKE Consulting 18

19 The Partner Ecosystem Disadvantage or Advantage? Item UC Software Microsoft Cisco Servers Partner Cisco SBCs Partner Cisco Phones Partner Cisco Video Units Partner Cisco Contact Center Partner Cisco Cloud Microsoft* Partner Installation Partner Partner Operations Other Other Note: Even if Microsoft is chosen, it may be through a VAR; thus you may still have a single vendor doing the integration. 19

20 Where Does the Money Go? Contact Center and Video Were Added in this On-Premises Example Microsoft Cisco To Vendor* 8.4% 39.9% To Partners Only 17.8% 4.4% To Others 73.8% 55.8% Big opportunity for hosted/managed services 20

21 Four Strategic Options All Cisco One Vendor Full PBX Guaranteed Integration Both Elemental Cisco for PBX Microsoft for IM & presence Little integration Both in Parallel All Microsoft Location or departmental Single Vendor (sort of) Support full UC Eliminate PBX (if stack for both possible) 21

22 If Lync Gets in the Door It is kind of insidious! Lync for IM and Presence Lync Peer to Peer Audio and Video Web/Audio Conferencing through Lync Add an SBC and Voice Trunks Lync Mobile Clients Lync Federation Lync Enterprise Voice 22

23 The Licensing Conversation Cisco 23

24 Microsoft Lync 2013 Different License Types Lync Server Licenses Front End Server role Plus each Survivable Branch Appliance Client Access Licenses (CALs) User Subscription Licenses (USLs) Office 365 and Lync Online Client License Windows Server Licenses SQL Server Licenses Exchange Server Licenses Don t Forget These Other Licenses Lync Licenses 24

25 Lync CALs Adds Conferencing Adds Enterprise Voice Adds Conferencing and Enterprise Voice Plus CAL Enterprise CAL Plus CAL Enterprise CAL Standard CAL (IM/Presence) The Lync 2013 Client license is often included with other products (Office Professional Plus, Office 365). Lync Mobile clients are free 25

26 Lync CALs (Per User) Plus CAL - $123 Enterprise CAL - $123 Standard CAL - $36 List Price for Full Stack = $282 26

27 Lync Server CALs 40+ Pages of Licensing Guide Core CAL Suite (CCAL) Enterprise CAL (ECAL) Enterprise Agreement Subscription (EAS) 27

28 Cisco Licensing Cisco Personal Multiparty WebEx Conferencing Unity Connection N/A N/A Expressway N/A N/A Jabber UC CPE & CPE & Jabber IM/P Hosted Hosted Prime Collaboration One One One/Two Multiple Multiple UCL Essential (Analog) UCL Basic $40 $125 UCL Enhanced/ Enhanced Plus $210/ $295 CUWL Standard CUWL Professional $325 $500 # of Devices Supported List Price 28

29 Cisco CUWL Pro (Per User) Cisco List Price for Full Stack = $500 29

30 Cisco Enterprise Agreement Cisco Software and service rights for entire organization in a single multi-year agreement Requires at least 2,000 knowledge workers Includes software, upgrade subscriptions (UCSS) and technical support (ESW) Considers previous investments in Cisco collaboration and support products Fixed cost for length of contract Unlimited organic growth and up to 20% of inorganic growth before true-up 30

31 Cisco Enterprise Agreement Offers Cisco 31

32 Unified or Universal Communications? Vendor licensing forces us to think in terms of point solutions Video: Lync Enterprise UCL Enhanced Voice: CUWL Standard UCL Basic/Enhanced Lync Plus Conferencing: CUWL Pro Lync Enterprise 32

33 Modeling TCO 33

34 A User Profile Should Drive Any Solution Workload/Capability Profile Type: Manufacturing Executive Highly Mobile Collaborative Worker Support Worker Task Worker Percent by Category 3% 20% 30% 17% 30% IM/Presence 100% 100% 100% 100% 100% Federation 100% 100% 100% 100% 0% Deskphone 100% 15% 50% 70% 15% Softphone 100% 100% 100% 50% 30% Executive Video Unit 50% 0% 0% 0% 0% Mobile Smartphone Client 100% 100% 100% 50% 30% Mobile Tablet Client 100% 100% 100% 50% 30% Conferencing Hosts 50% 100% 100% 10% 10% Phone Type Multi Line, Speaker, Touch Multi Line, Speaker Multi Line, Speaker 2 Line or Multi Line Single Line Busy Hour Conferencing 50% 20% 20% 2% 1% 34

35 A Look at the Licenses Required 5000 Users Executive Highly Mobile Collab. Worker Support Worker Task Worker Attendant Consoles Public Space Phones Analog Lines Video Rooms Lync Standard CAL Lync Enterprise CAL Lync Plus CAL UCL Essential 200 UCL Basic 200 UCL Enhanced CUWL Standard CUWL Professional User Licenses and CALs Total Microsoft Lync Standard CAL 5438 Lync Enterprise CAL 2848 Lync Plus CAL 4600 Cisco UCL Essential 200 UCL Basic 200 UCL Enhanced 1352 CUWL Standard 851 CUWL Professional 2835 Note that there are more than 5000 licenses required 35

36 TCO Components One time costs Total server software Total software CALs/Licenses Total hardware Total contact center Total videoconferencing hardware Total implementation costs Grand total one time costs 5-year total of annual support costs Server software maintenance / support Total CAL/License maintenance maintenance / support / support Total hardware support Total videoconferencing maintenance / support Total contact center annual support Grand total support costs Subtotal before support operating costs Operating costs Total rack space costs Total personnel costs Total power costs Total annual bandwidth cost Total SIP trunking cost Total operating costs Essential for Comparison of Premises vs. Hosted! 36

37 Where The Money Goes Case: 5,000 users. No Group Video. No Contact Center. EA Licensing One Time Costs Microsoft Percent Total Server Software $ 109, % Total Software CALs $ 1,558, % Total Hardware $ 511, % Total Contact Center $ 0.0% Total Video Conferencing Hardware $ 0.0% Total Implementation Costs $ 326, % Grand Total One Time Costs $ 2,506, % 5 Year Support and Maintenance Costs Annual Server Software Maintenance $ 0.0% Total Annual Software CALs Maintenance $ 0.0% Annual Server Software Support $ 147, % Total Annual Software CALs Support $ 2,099, % Total Hardware Support $ 109, % Total VideoConferencing Support/Maintenance $ 0.0% Total Contact Center Annual Support $ 0.0% Grand Total Support and Maintenance Costs $ 2,357, % Operating Costs Total Rack Space Costs $ 28, % Total Personnel Costs $ 6,600, % Total Power Costs $ 21, % Total Annual Bandwidth Cost $ 164, % Total SIP Trunking Cost $ 388, % Grand Total Operating Costs $ 7,202, % Grand Total $ 12,066, % One Time Costs Cisco Percent Total Server Software $ 0.0% Total CUCM Software Licenses $ 895, % Total CUBE SBC Licenses $ 20, % Total Unity Connections Licenses $ 44, % Total Hardware $ 888, % Total Contact Center Express $ 0.0% Total Video Conferencing Hardware $ 0.0% Total Implementation Costs $ 369, % Total One Time Costs $ 2,219, % Support and Maintenance Costs Annual Server Software Maintenance $ 0.0% Total CUCM Software License Maintenance $ 665, % Total CUCM Software License Support $ 520, % Total Hardware Support $ 25, % Total Contact Center Annual Support $ 0.0% Total Unity Connections Support and Maintenance $ 88, % Total VideoConferencing Support/Maintenance $ 0.0% Total Support and Maintenance Costs $ 1,298, % Operating Costs Total Rack Spack $ 30, % Total Personnel Costs $ 6,912, % Total Power $ 37, % Total Annual Bandwidth Cost $ 190, % Total SIP Trunking Cost $ 458, % Total Operating Costs $ 7,629, % Total $ 11,146, % 37

38 License Type Matters Case: Contact Center: No; Room Video: No; On-Premises Microsoft EA/SA vs EAS Licensing EAS = Enterprise Agreement Subscription Monthly or annual cost You don t own the software license Microsoft Enterprise Agreement with Maintenance (EA/SA Licensing) Microsoft Enterprise Agreement Subscription (EAS Licensing) Microsoft total: $12,066,668 EAS gives 23% Discount Microsoft total: $9,272,159 38

39 What About Conferencing Only? Cloud solutions are universally less expensive for conferencing only workloads Microsoft On-Prem Cisco On-Prem Microsoft O365 WebEx Cloud Note: box heights do not represent cost comparison between the vendors; only comparison between same vendor solutions. 39

40 Roadmap and Futures 1 What current Cisco UC users can expect 2 What current Microsoft UC users can expect 3 Suggestions for those who are undecided 40

41 Both Cisco and Microsoft Seek Differentiated Value Over Time ) conferencing conferencing conferencing center services effects 41

42 Cisco 42

43 Cisco: The Formal Position 1 Continued emphasis on video. New MX and SX series. First to market with H.265 video! Making video easy Back to the future: video should be as easy as a phone call Mobile device proximity coupled with mobile app to launch video 43

44 Cisco: The Formal Position 2 Turnkey small and mid market call control Supports video Some apps included (VM/IM/P) 25 CWUL Pro licenses comp ed Making voice easy Quicker rollout All virtual images included 44

45 Cisco: The Formal Position 3 Most V10 functionality will be available to service providers at the end of Q Provider must then roll it out Making cloud (a la HCS) more compelling Multitenant voice messaging Multitenant contact center Service providers can target SMB market ( users) VPN not required for remote workers 45

46 Cisco: My Take 1 From a September 2006 Cisco briefing Companies and markets evolve, and Cisco is striving to meet demand for video at all levels 46

47 Cisco: My Take 2 No Surprises Cisco HCS (cloud) results have been mixed Roughly 800,000 seats in use and 1.3 million sold to service providers (over capacity of 65%) HCS has been expensive in our RFPs Both in 2012 and 2013 Move to lower operator costs is good if it translates to lower end user costs Lower hardware costs (some multitenancy) Simplifying on-boarding and continued operations Could make HCS more competitive with other offerings in the SMB market 47

48 Microsoft 48

49 Microsoft: The Formal Position 1 Windows Phone Android Tablet Apple ipad Apple iphone Windows 8.1 PC All devices are running Lync Similar Lync or Skype Experience across devices 49

50 Microsoft: The Formal Position 2 1 Video bridge w/legacy systems SIP H Lync Room Systems 3 Video between Lync & Skype Crestron Smart 50

51 Microsoft: The Formal Position 3 1 PSTN calling from Lync Online 2 Larger Lync Online Meetings 3 JLync Java wrapper for Lync API 51

52 Microsoft: The Formal Position - 4 Others have tried to provide context and failed Why Microsoft might succeed.. My guess is that context aware search will be built into the search mechanism that comes as part of the operating system 52

53 Microsoft: My Take 1 Microsoft is gaining some momentum in voice Reminds me of where Cisco was 10 years ago Adding voice to Office 365/Lync Online is great for the SMB market Had a false start a few years ago, but it would be welcome to the O365 user Integrating legacy video investments is a good move for Microsoft The could have been done by partners (i.e. Polycom), but it is not hard for Lync Server to be the video bridge either 53

54 Microsoft: My Take - 2 The Lync-Skype Video Integration This is a good move I hate the fact that you must get a new Microsoft user identity (kind of kills the universal communications paradigm B2C w/skype (businesses pay the PSTN toll) May help enable more immediate rich interaction for SMBs Too much focus on consumer solutions may dilute momentum I really want to see my mom and kiddos on video all the time; I really *don t* want to see my business associates on video all the time 54

55 For the Undecided Some Strategic Approaches Do you ever feel like both solutions are good but missing just a little something? 55

56 Elimination Strategies 56

57 No Matter Which Solution You are Looking At Profile your users Workload/Capability Profile Type: Manufacturing Executive Highly Mobile Collaborative Worker Support Worker Task Worker Percent by Category 3% 20% 30% 17% 30% IM/Presence 100% 100% 100% 100% 100% Federation 100% 100% 100% 100% 0% Deskphone 100% 15% 50% 70% 15% Softphone 100% 100% 100% 50% 30% Executive Video Unit 50% 0% 0% 0% 0% Mobile Smartphone Client 100% 100% 100% 50% 30% Mobile Tablet Client 100% 100% 100% 50% 30% Conferencing Hosts 50% 100% 100% 10% 10% Phone Type Multi Line, Speaker, Touch Multi Line, Speaker Multi Line, Speaker 2 Line or Multi Line Single Line Busy Hour Conferencing 50% 20% 20% 2% 1% 57

58 No Matter Which Solution You are Looking At Look for unique requirements or situations Special group functions? Advanced Trunking or dial plan functions? Unique assistant functions? These may point you toward the vendor you need to pursue. 58

59 No Matter Which Solution You are Looking At Determine if you have The 70% Solution Your organization may require multiple communications vendors to meet its needs! 59

60 No Matter Which Solution You are Looking At Consider your expertise Are you more of a Cisco shop that a Microsoft shop or vice versa? Don t forget that OPERATIONS will likely be half of your TCO over time. If you have significant expertise with one or the other vendor, you may save time and money pursuing that vendor. 60

61 Investigate TCO By Looking at Alternatives TCO is only part of the picture, but it is important Do some modeling or get someone else to do it A close look at TCO may move a director or manager toward compromise. 61

62 Evaluate Vendors Using a Weighting Process Define Criteria Weigh Criteria Compare Vendors Crunch Data Outcome 25% 5% 14% 10% Jabber Lync Comparison by Non Outlook/Exchange or Outlook/Exchange and Worker Type Zoom View e 57 g ra 56 v e A ility a b53 a p C52 e 51 tiv la e50 R 49 Non Exchange Non Exchange Exchange Exchange Knowledge Information Knowledge Information Worker Worker Worker Worker Jabber Lync 4% 25% Customers and Public Close Held Partners Inter Business Windows 8 Smart Phones Open Smart Phones (Including Desktop Client) TCO 100 Active Directory SharePoint Business Applications Desktop Productivity Apps Video Conferencing Te lephony 6% Windows 8 Tablets/Slates PC Desktops Open Tablets Jabber Lync 11% Source: PKE Consulting 62

63 Building Block Approach User Profiles are an input to TCO modeling. TCO modeling is an input to a weighted decision analysis tool. 63

64 A Quantitative Example 64

65 Model Output Scenario 1 Scenario 2 Customers and Public Close Held Partners Inter Business (Including Desktop Client) 100 TCO Active Directory SharePoint Business Applications Desktop Productivity Apps Windows 8 Smart Phones Video Conferencing Other Smart Phones Telephony Windows 8 Tablets/Slates PC Desktops Other Tablets Knowledge Worker Jabber Knowledge Worker Lync Information Worker Jabber Information Worker Lync 65

66 To get a *free* copy of the weighted decision analysis model, send an to Phil Edholm at 66

67 Coexistence Strategies 1 Deploy equally and maintain both You will do this intentionally, knowing that this is likely the most expensive option. Management does this knowing that the benefits outweigh the costs! 67

68 Coexistence Strategies 1 Deploy equally and maintain both Inbound call Session Border Controller with Active Directory Lookup You could also do SIP trunking between them 68

69 Coexistence Strategies 2 Mostly eliminate one For your core UC capabilities across broad job profiles, standardize on a single communications and collaboration solution. Only those with special requirements have the other system. This will lower some costs; costs for the special requirements solution will likely be quite high. 69

70 Coexistence Strategies 3 Run one in house & one hosted Own the main UC solution and operate it yourself. For the special requirements solution move it to a hosted solution from a reputable service provider. 70

71 Coexistence Strategies 3 Run one in house & one hosted Enterprise Voice ~70 providers 71

72 Sometimes choosing between Cisco and Microsoft is like herding cats But it can be done! Video Source: HP/EDS 2009 https://www.youtube.com/watch?v=p k7yqltmvp8 72

73 Thank you Brent Kelly

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