Seizing Opportunity How Service Providers Can Take the Lead in Unified Communications by Taking to the Cloud

Transcription

1 The business voice market is changing fast bringing unprecedented opportunities for Communications Service Providers (CSPs) to assume the leadership role long held by IP private branch exchanges (PBXs) and other premise equipment vendors. Leveraging major advances in cloud computing, CSPs are selling a far more compelling offering: Unified Communications as a Service (UCaaS). Demand is spiking: A March 2014 study from the Synergy Research Group showed that businesses switching from IP PBX are selecting UCaaS at a far greater rate than traditional hosted business VoIP. MarketsandMarkets, among many others, expects the trend to continue. Its May 2014 report predicted annual global revenue for UCaaS will total $23.34 billion by Companies are moving from on-premise infrastructure to a cloud-based unified communications model, for cost savings and for more service options, the report said, citing cloud s advantages of pay-per-need/pay-per-use, reduced travel, reduced operational overhead and services that extend across sites. UCaaS has more bottomline potential with a greater net volume of lines or subscribers, greater ARPU per line and greater sales of auxiliary services, including bundled access circuits and network services. BroadSoft believes CSPs have the assets in place to surpass specialist operators, differentiate themselves from increasingly fierce competition and build margins through tailored services for horizontal (e.g. SMB and mid-market) and vertical (e.g. legal and healthcare) markets. Some CSPs have already made the leap. In the third quarter of 2014, 8x8, Shoretel and RingCentral accounted for a combined 35 percent of the UCaaS market, according to a 2015 Synergy report. Yearover-year growth for these three providers averaged 31 percent. This is an exciting and disruptive market which is shaking up the old order in enterprise communications, enabling UC to be more broadly adopted in smaller offices and planting the seed for cloud deployments in mid-to-large enterprises, said Synergy Research Group founder and chief analyst Jeremy Duke. This paper explores the many factors driving the adoption of cloud delivery, its related challenges and strategies for CSPs to quickly take the lead in the evolving business voice market. Figure 1: Managed and Hosted Voice Growth by Segment Cloud s Sharp Economic Edge Business subscriber and UC voice services are among the last applications to move to cloud delivery. It was worth the wait. CSPs can thrive in the UCaaS world by understanding the economic benefits for themselves and their business clients across seven primary areas: 1. Hardware utilization rates. Cloud delivery, which shares hardware across multiple applications and customers, can help achieve annual utilization rates close to 100 percent, compared to the average utilization rates of 5 percent to 20 percent offered by traditional servers. broadsoft.com 1

2 Cloud s economies of scale present customers with innovative pay-as-you-grow or pay-per-use models. 2. Energy costs. Average data centers with typical IT infrastructure achieve a power usage effectiveness (PUE) level of 2.5. PUE measures the ratio between the total power delivered into a data center and the critical power required to run the servers. Conversely, data centers using a cloud provider report considerably lower PUE values meaning much lower IT-related energy costs. 3. Reliability costs. Cloud delivery can dramatically reduce the costs of running a highly reliable, always available, disaster-ready IT infrastructure. 4. Security costs. Without compromising quality, cloud providers can reduce significant sums spent to protect data integrity, confidentiality and availability from increasing security risks. Moreover, businesses avoid capital expenditures for network security, software licensing, dedicated IT security personnel, regulatory compliance and physical security requirements. 5. Personnel efficiency. By eliminating the need to dedicate labor costs and hours to network maintenance, data center design, hardware procurement, upgrade installation and security, cloud delivery enables the more efficient use of IT personnel. 6. Agility costs. Building, extending or turning down infrastructure requires significant resources, which can cause companies to miss opportunities or move too slowly. Cloud delivery allows companies to address needs as they arise and become more responsive and more productive. 7. Planning and strategy costs. Cloud delivery bypasses the complexity of traditional hosted systems such as vendor evaluation processes, deployment issues, roadmap concerns, hidden costs and unforeseen scalability limitations. Businesses are already realizing the bottom-line benefits of the cloud delivery model. In a recent cloud.com survey of IT decision makers: 68% reported hardware savings 66% were able to deploy infrastructure more quickly 57% reduced their systems management burdens 51% saved money on the ability to scale up and down as needed 42% saved on automation capabilities Key Challenges: CSPs and Business Voice Delivery Why are voice-only and UC services being deployed via the cloud at a rate that exceeds PBX line sales? Because cloud neutralizes the increased costs and complexities related to PBX-based UC service delivery. End users seek to offload these costs and complexities to CSPs. Of course, that leaves CSPs to shoulder all burdens and costs related to the business and operational support systems, as well as the investments needed for commercializing and continually innovating their UCaaS. In the following, BroadSoft breaks out the essential broadsoft.com 2

3 steps involved with taking on a cloud-based offering and the challenges CSPs face with each one. Figure 2: Breakout of Typical CSP Operations *Service Delivery typically includes equipment install, turn-up and ongoing receipt of connectivity and communications capabilities. 1. Sales and order management: order entry, management and processing UC requires an integrated service experience, beginning with service ordering and preparation of orders for provisioning. CSPs need order entry systems that can, from different backend systems, consistently present and manage product components such as subscriber feature packages, phone types, minutes plans, mobile device operating systems and site locations all while combining these elements to form user, group and account IDs, or to map to APIs with external platforms. Order management also needs to accommodate software updates and new feature functionality from external systems and respond to business changes, such as adjustments to pricing, packaging and service bundling. 2. Service delivery: activation, installation and connectivity After order acceptance, components are converted to provisioning instructions, which perform functions like turning on the UC features. Activation messages are sent to multiple service delivery systems. Additional tags (such as an on-call display within a contact s presence icon) are used for interworking between different service delivery systems. CSP preparation at this stage includes: - Equipment for delivery, installation and activation - Updated device firmware versions for phones and any additional equipment, such as routers and switches - Device and client configurations for application on top of firmware, allowing for cost-efficient and simplified service turn-up - Accounts for telephony services, LNP requests and any other regulatory elements needed for user, group and account IDs In addition, CSPs need to activate feature packages in multiple dimensions, including portal access for admin users. They also need to correctly coordinate multi-tenancy across service delivery systems. Certain group level services may require silo rules to prohibit visibility and the interworking of defined features. During installation, CSPs must validate service connectivity across all delivery platforms. Call quality tests at target office locations can provide a support baseline for streamlining service calls during commercial operations. Testing should involve extended flows of real-time media traffic to ensure the minimum necessary LAN and WAN environments for a high-quality calling experience. 3. Capital infrastructure: call control, media mixing, voice and instant messaging, and more UC services are delivered through a combination of call control systems, media mixing equipment, IM&P servers, SBCs, firewalls, load balancers, web services platforms and phones the systems that drive feature-functionality across phones, mobile clients and web portals. Standing broadsoft.com 3

4 up this combination of systems involves a high commitment of both capital and staffing. The process begins with service definition, typically the documentation of the target service offering, end-customer value proposition, sales strategy, market and risk environment, capital commitments, product architecture and anticipated ROI. Determining this information usually requires a cross-functional team and broad organizational support. CSP teams then begin RFx processes, vendor selection and contract negotiations. After procuring infrastructure, IT staff begins integrating service delivery systems with the BSS/ OSS infrastructure and refining and documenting business processes. Teams perform tests on individual, integrated and complete systems and refine as needed. The multiple systems, devices and service elements required to commercialize UC services often raise overhead and extend the delivery timeframe, increasing the risk that services will be off the mark in terms of user trends and the offering s novelty. 4. Customer service: training, tier 1,2,3+ support, field teams and troubleshooting tools Users deem UC services as mission critical and expect reliability levels closer to the five 9s of a voice service rather than the three 9s of a cloud IT application. Customer support for UC services brings together many elements: network connectivity, voice services and business productivity applications. This makes training, support, servicing and troubleshooting more demanding for CSPs. Plus, interworking among systems introduces new variables making the source of issues harder to identify. Regardless of experience level with business voice services, all CSPs planning to offer UC services will need to invest time and resources in training for customer service staff, new internal support staff and others. Greater upfront investments in areas like media handling, online training tools and online portals mean fewer support burdens later. 5. Finance and billing: service data aggregation, compilation, invoicing and collections Many of the challenges with billing UC services result from the variety of package options: moving users between different package options, providing billing options to manage disputes and customer service issues, and exploring new options that respond to consumption preferences. To simplify sales, marketing and billing, many CSPs offer and many SMBs prefer service bundles. Bundles also present a compelling option for the enterprise market. However, enterprise customers with more sophisticated procurement groups may need billing structures with broken out service components so CSPs targeting a mix of clients will need considerable billing flexibility. Offloading Costs and Complexities with With, CSPs gain a UC delivery platform that leverages their branded customer-facing and operational assets, offers a streamlined product launch and enables rapid innovation that surpasses UC vendors in the IT and PBX markets. broadsoft.com 4

5 connects the BroadWorks UC platform to surrounding infrastructure and operations to offload both initial and ongoing development and maintenance costs. It s a time- and resource-saving alternative to constantly redoing the back office inhouse with limited resources. Figure 3: Partner Model WAN issues, and customer service moves, adds and changes Billing data aggregation: Includes APIs for providing CSP billing systems with billing data covering user packages, group/virtual packages and CDR mediation With, CSPs are free to focus on the critical activities of sales, solution engineering, customer support and customer service. Moreover, much of the complexity of BroadWorks is concealed behind simple, intuitive, branded portals and rich system APIs. Speeding Ahead Using the operational elements shown in Figure 3, delivers CSPs the following functions: Order management and processing: Includes portals for e-commerce (tools for a services catalog, CPE, pricing, promotions, discounting and customer site qualification), order management (to create, edit and cancel orders and check customer credit) and channel management Service delivery: Includes service provisioning such as order certification and processing, delivering APIs for CPE staging and shipping to the distributor/var, IP and wholesale VoIP interconnect, and LNP number assignment and porting VoIP switching equipment: Includes BroadWorks call control, BroadWorks UC servers, BroadWorks mobile, tablet and desktop clients, and session border control ports and policies Tier 2 and customer service: Includes portals for managing PacketSmart QoS, identifying LAN and In the May 2014 article UC Sales Destroying PBX Market, Channel Partners Telecom reviewed recent UCaaS sales numbers. Channel Partners Telecom concluded that, with growth exceeding 25 percent year-over-year and possibly still accelerating, CSPs should consider the value of going to market quickly with UCaaS. Figure 4: UC Applications Revenue, Year-over-Year YoY Global Revenue Growth 30% 25% 20% 15% 10% 5% 0% 1Q11-1Q12 1Q12-1Q13 1Q13-1Q14 Infonetics Research, Enterprise Unified Communications and Voice Equipment Quarterly Market Share, Size, and Forecasts, May 2014 CSPs should also understand the potential of lost revenues due to delays in customer acquisition, extended time to market and missed market windows under increasing competitive pressures. broadsoft.com 5

6 s streamlined onboarding process in which CSPs leverage key brand, customer service and support assets enables a rapid time-to-market of just three months. Go-to-market support throughout the onboarding process ensures a more effective launch, helping CSPs target horizontal and vertical segments and position key features and functionality for specific buying requirements. Beyond the initial launch, the mix of infrastructure and operations speeds the rate of ongoing innovation boosting brand loyalty. For example, CSPs can introduce new services two to three times each year versus every 15 months. A structured approach to market planning and a comprehensive strategy can help CSPs take full advantage of their UCaaS offer to drive additional gross revenue for example, positioning a broader suite of cloud or directly delivered services around UCaaS. In total, CSPs using could see $700 more of revenue per subscriber, or 42 percent more revenue over five years, over hosted UC. Figure 5 compares a product launch taking three months through cloud delivery via with one taking 18 months using a hosted UC option. In this high growth market, the sales impact of missing the UCaaS launch window could be severe. It s Time to Take the Lead The continued turn-down of premise-based PBX systems in favor of cloud delivery models and UC puts a wide range of options at the disposal of CSPs. addresses the key obstacles including time to market, back office complexity and cost clearing the way for the rapid launch of compelling UC packages that integrate with current customerfacing assets. Whatever cloud delivery and UC options they pursue, CSPs need to move quickly to take full advantage of UCaaS the service innovation that now gives network-based solution offerings the opportunity to compete and win. ABOUT THE AUTHOR Dave Walters is senior director of market offers and has worked at BroadSoft for over 10 years. Dave s 20 years in the industry includes experience in management consulting, wireless service product management and marketing session control infrastructure. Dave holds an MBA from the University of Michigan along with a BA and BS from the University of Maryland. For more information, visit us online at i broadsoft.com 6