Betting on the Future with Unified Communications:
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1 50 Years of Growth, Innovation and Leadership Betting on the Future with Unified Communications: Hosted Services can Drive Business Value and Create New Opportunities A Frost & Sullivan White Paper www.
2 Frost & Sullivan Introduction... 3 The Changing Nature of IT... 4 Flexibility Is Key... 5 Faster Decision Making, Accelerated Time to Market... 5 Focus on Core Competencies, Strategic Value... 5 Mitigating Risk... 6 Future Proofing and Visioning... 6 The Value of Hosted Services for UC... 7 CAPEX Savings... 8 Flexibility, Scalability, and Risk Management... 9 Strategic Focus, Core Competencies Centralized Management Application Integration Business Continuity Best-Case Scenarios for Hosted UC Greenfield Environments and/or Amortized Infrastructure Rapid or Unpredictable Growth Trial New Technologies for Specific Sites and Business Groups Small and Mid-Size Organizations Large Enterprises Geographically Dispersed Organizations Conclusion... 9 CONTENTS
3 Betting on the Future with Unified Communications INTRODUCTION As companies become increasingly global and geographically distributed, the very nature of business is changing. Global expansion and an increasingly dispersed workforce are driving project teams and department members to span multiple countries, continents, cultures, and time zones. At the same time, an increased focus on work-life balance, along with efforts to recruit employees based on talent and qualifications rather than location, are combining to create an increase in the number of virtual workers who, nevertheless, need to effectively communicate and collaborate with their office-based colleagues and one another. Unified communications (UC) an integrated set of voice, data, and video technologies running on an array of endpoints and devices to deliver a consistent experience to the end user can help keep mobile and remote workers connected and collaborating with each other and their office-based colleagues. However, as communications have evolved to become key enablers of core business processes and competitive differentiation, businesses face considerable uncertainty when deciding whether to invest in a new communications infrastructure. Rapid technology evolution, complex integration requirements, and the need to support a variety of end users on an array of devices are forcing IT to take a new approach to deploying technology. As a result, many companies are looking at hosted solutions as a reliable and cost-effective alternative to a premises-based infrastructure, in part or all of the organization. Frost & Sullivan research shows that many businesses that have not yet deployed UC solutions plan to do so over the next few years. As they do so, they must ensure continuity and protect existing, unamortized assets. Furthermore, as UC platforms become more complex and include advanced capabilities, such as real-time location information and social media capabilities, IT departments often lack the in-house expertise they need to properly deploy, monitor, and manage converged, applicationrich solutions. Since many organizations have already invested in certain components of UC often including voice, IM and/or conferencing they need the flexibility to deploy UC in a hybrid environment, comprising multiple applications and services from a variety of vendors and providers. This task requires a stepped and integrated approach. With such challenges, hosted services can offer significant advantages, including little or no upfront costs, fast and easy implementation and ongoing support, scalability (up or down), and quick deployment to small or widespread user groups, as well as business continuity and support for virtual workers on a daily basis. By letting a systems integrator handle the technology and any necessary integration, companies can spend their time thinking about innovative ways to use UC to improve business processes, expand customer service, and develop new products and services. This paper will identify the challenges facing IT in today s global business environment; it will discuss the ways in which hosted UC technologies can help 3
4 Frost & Sullivan support communications and collaboration among distributed workers; and will suggest innovative ways businesses and managers can use UC to improve processes and drive the bottom line. THE CHANGING NATURE OF IT As businesses grow increasingly global, with more employees working in locations that are different from those of their colleagues, managers, and direct reports, the job of managing hardware and applications is changing. IT managers and staff are no longer just responsible for deploying bits and bytes or software applications and the devices on which they run. Instead, their jobs are becoming much more strategic; they must be prepared to identify and deploy a range of new technologies, as well as the business processes those tools will improve and support. This is especially true as more employees are using technology they discover and purchase on their own. Advanced Communications Can Advance the Banking Industry Forward thinking banks are using unified communications to deliver new services and better customer service. For instance, banks can use texting to give mobile users information about their accounts whenever they need it. Fraud notifications can also be delivered this way, as well as via and voic as preferred by the customer. Banks can also use presence and IM to service their customers on an immediate, as-available basis while engaging with their customers via social media, like Facebook and Twitter, for both marketing/branding and customer response. Video conferencing and telepresence let banking specialists (like mortgage brokers, commercial bankers, or native-language speakers) maximize value by working with clients regardless of where they are located, without the need for travel or long commutes. The end result: better use of time and money for the consumer and the bank. Clearly, the days when employees relied only on a landline phone and for communications are long gone. Advanced communications, such as Voice over IP (VoIP), presence and instant messaging (IM), unified messaging, conferencing (audio, Web, and video), and social networking capabilities let users connect and exchange ideas more effectively than ever before while mobile communications offer new opportunities for keeping employees connected 24/7. Many of these tools have made it into the workplace via employees, who buy them or use them (free) at home, who are looking for ways to leverage them on the job. Now, smart companies realize they need to assess, purchase, and deploy these technologies as part of their organization s IT and communications infrastructure to 4
5 Betting on the Future with Unified Communications better enable collaboration and improve business processes. However, they do not necessarily want to install new applications on the premises, and they do not always have the skills, time, or resources to manage ongoing maintenance and support. Additionally, IT and telecom staff have been reduced at many organizations, and the remaining employees are left with more work and fewer resources than ever before. These factors make it difficult for telecom staff to properly manage enterprise infrastructure while maintaining a strategic focus and keeping an eye on the bottom line. Flexibility Is Key As businesses increasingly support a virtual workplace, their communications infrastructures must evolve to be cost-effective for small sites while scaling quickly and easily during periods of rapid growth or cuts. They must support new users on a uniform set of features, deliver a common dial or access plan for a consistent customer interface, and be easily extended to external partners, customers, and suppliers as needed. Companies must also be willing and able to support users on a variety of devices and applications some of which they may themselves introduce to the organization by bringing them in from home and using them on the job. Companies must make it easy and desirable for employees to work outside of normal business hours from anywhere (including home offices, airport gateways, hotel rooms, and so on). The new measure of distance in the corporation is connectivity. Faster Decision Making, Accelerated Time to Market As businesses face tough economic conditions across a global marketplace, they must be able to react quickly to changing conditions and new opportunities. This aspect requires fast access to information and expertise, ensuring that the right decisions get made at the right time. In many organizations, inefficiencies in the communications infrastructure prevent far-flung employees from collaborating effectively, both internally and externally, with customers and partners. Businesses that choose to leverage advanced communications to compensate for an increase in virtual workers and macro-economic challenges are better able to maintain internal productivity and customer satisfaction. Focus on Core Competencies, Strategic Value Businesses grow more rapidly and improve their bottom lines by focusing on their core competencies. For most organizations, that does not constitute IT. Spending money, time, and personnel on technology assessment, deployment, and management may not make sense if those resources could be better spent on supporting and developing the business itself. 5
6 Frost & Sullivan Technology is increasingly becoming a competitive differentiator for many companies, which means that IT can take a more strategic role in the organization. By outsourcing the day to day deployment and management of the bits, bytes, and applications, IT can focus on ensuring that the technology they use and champion will have the best possible impact on the business overall. Mitigating Risk As communications become more complex and as employees and operations grow more global and widespread, companies are faced with more risk around any investments they make. While suspending or postponing new communications investments can help conserve cash and mitigate the risk that comes with change, doing so is not a viable long-term strategy. Rather, share the risk with a trusted partner. Companies should also be aware of the need for redundancy and disaster recovery capabilities, especially as their operations grow increasingly dispersed. Many forwardlooking businesses recognize the benefits of migrating to a converged network and an IP communications infrastructure to minimize operational risks and ensure business continuity. Indeed, delaying the migration to a next-generation infrastructure contains numerous evident and hidden costs, including technicians labor to fix failure; equipment parts; employee and management downtime; customer dissatisfaction and reduced loyalty; employee recovery time; and opportunity costs, including lost sales and wasted opportunities to provide better customer service. IP communications can help companies develop a better business continuity strategy, avoid disruptions and downtime, and ensure superior business performance. Future Proofing and Visioning Technology is changing at an increasingly rapid pace, and that is driving the need to future-proof investments in communications and IT infrastructure. The best way to do so is to deploy services and applications that are based on open standards, especially since SIP-based, service-oriented architecture (SOA) platforms and services will integrate with a wide range of endpoints and other SIP-based applications, offering flexibility and investment protection. It is also important for companies to be able to deploy key elements of a complete unified communications solution today while plugging any additional components into the mix, as needs require and budgets allow. Equally as important is envisioning what that future holds for the organization and the ways in which technology can support and enable such change. As its role becomes more strategic, IT must work to develop a broader business and technology vision for the department and the organization as a whole. 6
7 Betting on the Future with Unified Communications THE VALUE OF HOSTED SERVICES FOR UC The ever-expanding array of communications tools is empowering users, but it is also becoming increasingly difficult for IT to effectively integrate, monitor, and control. Delivering a reliable and valuable UC platform is not easy. For one thing, UC is made up of multiple components devices and applications all of which must work smoothly with one another to deliver a seamless, consistent user experience. Since most companies already have at least some of the functionality that will comprise their overall UC deployment, they must consider what to keep and what to replace as they implement new capabilities. Finally, IT must decide whether they want to move toward an end-to-end solution from a single, strategic vendor, or whether it makes more sense to adopt a best-of-breed, hybrid approach by mixing and matching hardware and software from a variety of providers to maximum effect. The first approach guarantees interoperability within the UC stack and is generally easier to manage and support. However, many of the individual capabilities may not compare well to their best-of-breed counterparts. Most businesses have already deployed multi-vendor infrastructures and are likely to continue to invest in disparate solutions based on specific features or preferences. Benefits of Hosted UC Ability to remove telecom cost through centralized SIP trunking Move from Capex to Opex Focus IT on strategic initiatives Improve feature function and integration Deliver on employee expectations for real time access and real time decision-making Before they begin their UC deployment, businesses must first identify the communications applications and vendors that best meet their needs. In a premises-based environment, this stage requires a rigorous assessment of the technical capabilities of the individual solutions, as well as any given vendor s road map for future development. At this point even before the first router or application has been installed internal staff frequently find themselves overwhelmed by the amount of expertise required to assess, implement, and manage so many rapidly evolving technologies. Indeed, many businesses and their 7
8 Frost & Sullivan channel partners lack the necessary UC and application-integration skills, as well as the ability to effectively manage integrated solutions on an ongoing basis. As a result, many businesses are unable to take advantage of the benefits of UC. Hosted solutions can eliminate all of these concerns while delivering additional benefits. They can be a boon to small and mid-size companies, which might opt to deploy hosted UC services throughout the organization in addition to larger enterprises, which are often contracted for hosted services in certain regions, departments, or use-case scenarios, all while maintaining premises-based systems in other areas of the company. CAPEX Savings Hosted UC reduces or eliminates capital expenses, which is a significant advantage for small businesses, organizations in certain verticals (including education and government), and businesses with limited access to up-front funding. For example, Frost & Sullivan research shows that by moving basic call control and voice features into the cloud, businesses can save $300 to $500 per line. They can also eliminate up-front software licensing costs for communications applications. This allows businesses to avoid paying for video conferencing systems out of the capital budget by consuming the hardware as a service instead. Conferencing is also technologically dynamic, changing every year. Services ensure users have the latest and greatest technology without the need for costly upgrades. As companies improve their customer service by introducing UC into the contact center, hosted solutions can deliver those capabilities more economically than premises-based systems. High-volume contact center traffic can consume large amounts of capacity, requiring businesses to overprovision and thus incur considerable inefficiency costs. Hosted architectures are more scalable, even on a seasonal basis, making them more cost effective for many businesses. 8
9 Betting on the Future with Unified Communications Unified Communications Can Help Cure Healthcare s Ills Healthcare organizations like hospitals, imaging facilities, clinics, and doctors offices can use unified communications to drive caregiver collaboration and increase patient satisfaction. For instance, to deal with underserved populations, doctors can use video conferencing to conduct patient evaluations without having to travel to remote locations. If they integrate video collaboration applications, specialists will be able to extend patient care to remote populations. They can then offer a diagnosis and remedy, all without the specialist or the patient having to travel. Meanwhile, chat capabilities and texting services can help facilities re-imagine how they monitor drug intake and charting, as well as how they deliver reminders to caregivers (who may be due to perform a certain procedure or follow-up) and patients (for appointments, drug dosages, therapy, and so forth). Presence information helps nurses and doctors find their colleagues as soon as they need them and can also help them locate appropriate, available substitutes if the attending physician is unavailable. Finally, mobile devices ensure providers can care for patients from anywhere whether they are reviewing MRI results, checking in on drug intake and interactions, or collaborating with colleagues on a remote, specialized case. Flexibility, Scalability, and Risk Management The recent recession and unstable recovery have shown that companies are increasingly faced with the need to scale both up and down as quickly as possible. With premises-based implementations, downsizing often results in unused communications capacity while scaling back up can be costly and time consuming. Hosted services offer greater scalability and flexibility on several fronts. Businesses using hosted services can discontinue unused lines and licenses on demand and adjust operating expenses accordingly, whereas premises-based solutions often result in unused capacity and sunk costs (unused telephone lines alone typically incur monthly services fees of $20 to $50 per line, and maintenance and in-house telecom management staff costs can amount to thousands of U.S. dollars per month). Hosted services also benefit growing companies. In a premises-based environment, new servers are often required to support even a small number of new users, whereas hosted lines can be added one at a time as soon as the new employees come on board. By extension, the flexibility to prevent lock-in with a specific vendor, thereby reducing switching costs, helps businesses ensure that their communications infrastructure evolves with their needs. 9
10 Frost & Sullivan Strategic Focus, Core Competencies As communications architectures become increasingly complex, partnering with a trusted communications expert can ensure that the company s infrastructure is properly deployed and efficiently managed. Because hosted services include all necessary maintenance and support, with most infrastructure management handled by the service provider, they free up IT personnel to focus on core business activities. Frost & Sullivan research suggests that the ability to reallocate staff and eliminate the cost of hiring, training, and retraining communications support personnel can be measured in hundreds of thousands of U.S. dollars per year. Better yet, with hosted services, IT can focus on strategic business initiatives, looking for ways in which new technology can support business functions and improve the company s bottom line. This factor makes them much more valuable to the organization, without losing sight of the need for a robust, well-maintained, and responsive communications infrastructure. Centralized Management A hosted UC infrastructure lets companies converge their voice and data access lines while saving as much as $1,200 per T1 line per month, according to Frost & Sullivan research. Many businesses choose to keep several converged lines for redundancy, but, even in those cases, the incremental cost is almost always justified by the additional capability. With IP communications, IT staff can use a Web interface to configure and manage endpoints, applications, and settings, as needed, which gives end users greater control of their communications and reduces costs. This is especially valuable for UC since end users are often provisioned according to a single identity manage that, and you manage their access to voice, data, conferencing, and collaboration. Application Integration Hosted UC solutions enable a greater range of capabilities and integration than many organizations can provide on their own. In addition to core PBX functionality, hosted UC services can include voice mail or unified messaging; advanced telephony capabilities, such as auto attendant and call recording; audio, Web, and video conferencing; presence and chat; and even advanced collaboration applications along with social media integration. Packaged UC capabilities eliminate the time, money, and effort required to integrate disparate applications deployed on premises. It is also often easier to deploy fixedmobile convergence (FMC) in a hosted environment. In a premises-based implementation, additional equipment, such as gateways, may be required. In a hosted scenario, the service provider can turn a mobile device into a hosted IP telephony extension at a fraction of the cost. 10
11 Betting on the Future with Unified Communications Systems integrators can also help with the integration needed to support a hybrid UC environment made up of applications and services from a number of different vendors. This is especially important when it comes to supporting communicationsenabled business processes (CEBP), which connect people, processes, and information with communications in order to reduce inefficiencies and human latency. These connections make information from multiple sources accessible, manageable, and actionable to users within the context of a workflow, empowering users to take action and make decisions based on contextual, real-time data. Business Continuity Service providers typically deploy redundant architectures in several Network Operations Centers (NOCs) to avoid disruptive network failures and service downtime. They also support standardized delivery, people, processes, and tools while offering broad life-cycle management. As a result, unlike premises-based implementations, hosted services offer redundancy and disaster recovery capabilities at no additional cost. Hosted communications can also be used as a business continuity solution to a premisesbased implementation, as capacity and capabilities can be provisioned rapidly and on demand, should anything go wrong with the premises-based equipment. Knowledge Workers Use UC to Manage Information for Maximum Value The next generation of workers is bringing a different approach to sharing expertise in the workplace. Social networking and other collaboration applications encourage and reward information sharing and collaboration; they make people more inclined to collaborate in the first place. Smart companies recognize that, right now, they have a rare opportunity to leverage technology to take advantage of a cultural shift one that is helping people work smarter, not harder. Companies are also looking for ways to enable collaboration, not only among local employees, but between employees, their business partners and customers on a global scale. Unified communications tools support data discovery, knowledge sharing, and collaboration by routing information to the right people at the right time, and by putting employees in touch with their colleagues with the skills and experience they need to get a particular job done. Employees can even use the new technology to identify language speakers (native or not) and others familiar with the culture of a particular region or office. 11
12 Frost & Sullivan BEST-CASE SCENARIOS FOR HOSTED UC Hosted services can be a boon to businesses of all sizes and in a variety of industries, but there are certain situations that better lend themselves to hosted environments than others. Some companies will opt to deploy hosted solutions in such discreet cases, using them as a sort of test run for wider deployment across the organization. Others may choose to identify those scenarios in which hosted services are better than premises-based systems for certain situations. Greenfield Environments and/or Amortized Infrastructure Typically, so-called Greenfield environments including new offices, or situations in which the entire network must be replaced for practical reasons offer the most favorable conditions for deploying hosted UC since there is no legacy infrastructure to consider. Such scenarios are rare, however, many organizations find themselves opening remote offices and other sites on occasion and, those too, count as Greenfield situations. Businesses with amortized telephony or networking equipment, or expiring or outdated software contracts, are also well positioned to consider hosted UC as a replacement for their existing infrastructure. Such businesses can economically and rapidly leverage the benefits of an end-to-end unified communications infrastructure since they can replace the entire solution at once with a single provider. Rapid or Unpredictable Growth Businesses experiencing rapid growth should consider deploying hosted UC for new employees because it allows them to quickly and easily add capacity on demand. While integration with existing premises-based technologies may present some challenges, its needs can often be met by a systems integrator with experience not just in hosted applications, but also in premises-based deployments and managed services. Furthermore, deploying hosted UC to select groups first can serve as a migration strategy for the entire organization, especially if the business is growing primarily by adding small branches and remote workers (a common scenario today). Trial New Technologies for Specific Sites and Business Groups Companies interested in deploying new capabilities, without the risk of a major capital investment, can first test new technologies on a hosted basis. For example, companies considering an end-to-end UC solution (including VoIP, presence, unified messaging, IM, and conferencing) can trial it with select branches or project teams across locations on a hosted basis. Hosted services will allow teams to startup and run quickly without any need for involvement (or training) on the part of IT. Once the benefits prove out and the company is ready to deploy the technology enterprise-wide, IT and line-ofbusiness executives can decide whether to continue using the hosted solution or utilize a premises-based system instead (or, perhaps, a mix of both). 12
13 Betting on the Future with Unified Communications Small and Mid-Size Organizations To date, hosted UC has been most popular among SMBs and smaller sites within large enterprises. This is primarily true because hosted services can easily scale down to a small number of users, especially compared with premises-based systems, which are most economical for sites with more than 50 users. Hosted services also let small businesses/sites eliminate technology support staff and focus on core competencies. Large Enterprises For large enterprises, the benefits of hosted UC are seen in the shift from a capitalintensive model to an opex model, in which enterprises pay by the seat for an advanced communications infrastructure with full integration with desktop services. This includes , IM, and collaboration. Thus, relieving the IT staff from design, implementation, monitoring, and management, frees them up for more strategic initiatives. Many large organizations have already invested in communications and collaboration. As a result, their vision of UC revolves around a hybrid environment, comprising multiple vendors, applications, and services, to ensure previous investments are fully leveraged. While a hybrid environment may not be fully cloudbased, it can still be supported through managed services. Finally, at many companies, the existing voice infrastructure (TDM or IP) will not support the integration of applications and business processes with the communications platform. UC as a service lets large companies upgrade their communications infrastructure without significant capital expense. Geographically Dispersed Organizations Among medium and large businesses, those with geographically dispersed sites can benefit the most from hosted UC services. As organizations become increasingly virtual, many new employees are effectively remote workers, whether they work from a small remote office location or from home. Typically, remote sites do not have the internal resources to manage a communications system and are too small to justify the investment in a premises-based platform and the necessary IT staff to maintain it. They still need to integrate with the rest of the organization s users and locations. Hosted UC services can offer a costeffective way to deliver communications to such sites, as well as deliver different features to different users or departments based on their specific needs. They can then bill individual sites or departments separately, if required. 13
14 Frost & Sullivan The Mobile Workplace is the Office of the Future Companies should start thinking about how they outfit their employees today to ensure they stay competitive tomorrow. It is no longer enough to give an employee access to a PC and a landline telephone. Many organizations are looking at replacing those old-school tools with mobile devices, including smart phones and tablets; soft phones and headsets; video conferencing at the desktop and in room-based environments; and hosted services that can be accessed by anyone, from anywhere. The goal is to enable the millennial generation to make use of the technology they have come to expect and rely on and to bring their older cohorts along for the collaboration ride. What s more, a mobile office ensures that in a world, in which the people working for you may not be your employees but, rather, consultants, partners, contract workers, and even customers, building a cloud-based ecosystem makes it easy to deliver the communications they need, when they need them, and not when they don t. Added benefits include shorter decision cycles, reduced human latency in business processes, and delivery of a real-time working environment. CONCLUSION Employees are increasingly working from locations that are different from those of their managers, colleagues, partners, and customers. To stay as productive as possible, they need access to advanced communications and collaboration applications. Meanwhile, businesses are facing a slew of new challenges, including the need to stay flexible and accelerate decision making, often across geographic and cultural boundaries. Businesses must alsdo focus on core competencies and strategic initiatives while mitigating risk and taking advantage of new opportunities to stay competitive in a constantly changing global marketplace. IT must change to support these new initiatives and goals by becoming more strategic to the organization, by understanding and identifying the business value of technology, and by delivering advanced communications capabilities quickly and cost-effectively to all end users who need them. Many companies are using hosted services to deliver unified communications including voice, conferencing, presence and collaboration to a range of employees across the organization. Hosted UC services offer flexibility, reliability, and scalability, and they allow IT to focus on mission-critical, strategic business initiatives while keeping costs and operations in check. As they consider where best 14
15 Betting on the Future with Unified Communications to deploy hosted UC, companies should first look to pilot the technology in Greenfield or amortized environments, small sites or specific user groups, and geographically dispersed regions. That way, they can experience, evaluate, and measure the benefits in a discrete case while extrapolating those benefits across the wider organization when budgets allow and needs require. As the UC market has matured so has the roster of providers supporting UC services. Hosted and hybrid implementations support the integration of business applications and business processes with the communications infrastructure, which is essential to delivering on the value of UC. Systems integrators have taken an active role in the deployment and support of UC and have brought a broad suite of consulting, managed services, and integration capabilities to the communications market. 15
16 Silicon Valley 331 E. Evelyn Ave. Suite 100 Mountain View, CA Tel Fax San Antonio 7550 West Interstate 10, Suite 400, San Antonio, Texas Tel Fax London 4, Grosvenor Gardens, London SWIW ODH,UK Tel 44(0) Fax 44(0) GoFrost ABOUT FROST & SULLIVAN Frost & Sullivan, the Growth Partnership Company, partners with clients to accelerate their growth. The company's TEAM Research, Growth Consulting, and Growth Team Membership empower clients to create a growth-focused culture that generates, evaluates, and implements effective growth strategies. Frost & Sullivan employs over 50 years of experience in partnering with Global 1000 companies, emerging businesses, and the investment community from more than 40 offices on six continents. For more information about Frost & Sullivan s Growth Partnership Services, visit For information regarding permission, write: Frost & Sullivan 331 E. Evelyn Ave. Suite 100 Mountain View, CA Auckland Dubai Mumbai Sophia Antipolis Bangkok Frankfurt Manhattan Sydney Beijing Hong Kong Oxford Taipei Bengaluru Istanbul Paris Tel Aviv Bogotá Jakarta Rockville Centre Tokyo Buenos Aires Kolkata San Antonio Toronto Cape Town Kuala Lumpur São Paulo Warsaw Chennai London Seoul Washington, DC Colombo Mexico City Shanghai Delhi / NCR Milan Silicon Valley Dhaka Moscow Singapore
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