An Industry Perspective on the Future of Work Connections Survey Results 2015
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1 An Industry Perspective on the Future of Work Connections Survey Results 2015 #BSFTConnections
2 Dear Friend, Each year in October for the past 16 years, BroadSoft has hosted the premier industry event for cloud communications called BroadSoft Connections, which is attended by more than 1,000 top service providers and industry leaders. Today, BroadSoft sells cloud communications and collaboration software to over 700 service providers, out of which 26 are amongst the top 30 global providers. These BroadSoft-based providers deliver services to almost 70% of global business users, putting BroadSoft into the #1 position for global hosted IP telephony and UCC services, according to Frost & Sullivan. Taher Behbehani Chief Marketing Officer BroadSoft With all this expertise in one place, we conducted a survey at our October 2015 Connections event in order to capture attendee thoughts on the rapidly shifting business communications landscape. We think you ll be surprised with the gamechanging insights, and future market predictions found inside this ebook. Regards, Taher 2
3 Executive Summary Overall the survey illustrated a very positive outlook for the growth of cloud-based communications and collaboration over the next five years. Of particular note was the prediction that there would be a rapid shift from premise PBX systems to cloud communications, across all market segments - small, medium and large. The chart below shows a summary of attendee predictions out to 2020 (top bar, darker color) vs. current shipments of cloud VoIP/UC in 2015 as estimated by BroadSoft (lower bar, lighter color). For access to the full survey results, click here. Keep in mind that today, market share by business size (for communications in general, meaning both premise and cloud) is segmented into roughly: 51% small business 42.5% medium business 6.5% large business 3
4 Key Drivers to Changing Business Communications The marketplace for business communication services is undergoing a radical transformation. For starters, employees are going rogue when it comes to what applications and services they are using for business communication and collaboration. As you can see by the chart above, business phones are actually fading in relevance a new approach beyond just voice is clearly needed. 4
5 The tools businesses use today are poorly suited to their challenges. Communications, notifications and information are scattered across a wide range of devices and applications. Existing collaboration tools are typically limited in scope, which leads to ineffective conference calls and meetings. Most troubling of all, business processes and workflow are fragmented causing productivity to plummet as employees switch among multiple applications and tasks. The cumulative financial impact of this dysfunction is costing businesses billions annually. 5
6 Today s workforce is changing and so are technology preferences. Millennials have grown up with technology at their fingertips, and they are quick to bring their preferences to the workplace. While other demographic groups have been convinced of the merits of a cloud-based delivery model, for Millennials it is a more natural choice and solidly in their wheelhouse. It should be no surprise that as they have begun to move into management positions and make business-impacting decisions, cloud adoption is accelerating across organizations of all sizes. 6
7 Communication service providers are facing a perfect storm of their own. Traditional, fixed-line telephony revenues are falling. To compound the issue, revenues for cellular and broadband services have begun to plateau, with stiffer price competition and lower margins. Customer churn remains a costly and pervasive issue as well, with both consumer and business customers jumping from carrier to carrier in search of a better deal. 7
8 Market transformation is opening up emerging opportunities. Data from both BroadSoft and industry analysts shows strong growth in cloud-based communication services. Businesses are using hosted PBX services and UCaaS (Unified Communication as a Service) to replace an aging installed base of premises equipment, and they are turning to new cloud-based unified communication and collaboration services to help them work more productively from anywhere, with less complexity and expense. 8
9 But what do service providers and industry leaders think? We surveyed nearly 130 participants out of the 1000 top service providers that attended Connections 2015, on how they believe the marketplace will evolve over the next five years and how they plan to respond. How bullish are they about cloud-based services as a strategy for boosting revenues and slowing costly churn? Following are the survey results! 9
10 What market position will cloud vendors attain by 2020? A: Service providers are bullish on the cloud. Service providers expect significant growth in hosted PBXs and unified communications as a service, projecting market-shifting increases in cloud revenues by That growth crosses all segments of the business market, from sole practitioners to the largest of global enterprises. It also is expected to propel cloud vendors like BroadSoft to a top five market position displacing premises PBX providers as the momentum shifts to the cloud. 10
11 What is your strategic, lead and preferred technology solution strategy? A: The cloud is changing how service providers sell. More than nine out of 10 service providers currently lead any sales opportunity with cloud-based solutions. Only ten percent continue to see traditional premisesbased PBXs as their market gateway. 11
12 In five years, what percentage of hosted PBX/UCaaS market share do you believe cloud solutions will capture in the Small Business* segment? A: Small businesses prefer cloud. Cloud communications solutions are already on the radar screen for many small firms, and the momentum is building. Service providers believe the cloud will a major player in the market for small business communications by (*under 100 employees) 12
13 In five years, what percentage of hosted PBX/UCaaS market share do you believe cloud solutions will capture in the Medium Business* segment? A: Adoption rates among mid-sized businesses will explode. Service providers also expect over a 7x gain among mid-market companies. Over half of all respondents believe that cloud solutions will capture at least 37 percent of the mid-sized business communications market, which aligns with projections from industry analysts. (* employees) 13
14 In five years, what percentage of hosted PBX/UCaaS market share do you believe cloud solutions will capture in the Large Enterprise* segment? A: Cloud adoption will move up market. Service providers are confident they will make newfound share gains among even the largest global enterprises. These large firms are being lured away from their current premises-based PBX infrastructure by the superior cost, scalability, mobility and multi-site capabilities the cloud delivers. (*1000+ employees) 14
15 In five years, what proportion of UC interactions will occur on mobile devices? A: UC and mobility will become synonymous. Increasingly large percentages of unified communications interactions will take place over mobile devices, service providers say. That means viable cloud solutions must be optimized for mobile devices, not just desktop PCs and phones. 15
16 In five years, what percentage of small businesses will use 100% mobile/cellular only Hosted PBX/UCaaS cloud solutions? A: Small businesses will cut the cord. With compelling cloud offers to choose from, service providers believe a significant percentage of SMBs will build on the emerging mobility trend and eliminate premises PBXs and wired telephones entirely. Instead they will adopt an all-cellular approach to business communications. 16
17 Will solutions be disrupted by enterprise integrated messaging and team collaboration and communication tools such as HipChat, Glip, Slack, etc.? A: ... Really!?!? With a host of new cloud-based integrated messaging, communication and collaboration tools, service providers believe enterprise is becoming an oldschool technology and soon will be displaced. Only 18 percent believe it has true staying power. 17
18 What approach do you consider to be your biggest strategic threat? A: Service providers see competing cloud solutions as their biggest threat. Only five percent believe premise-based, IP PBX solutions will represent true competition. Instead, the cloud is expected to win the day. 18
19 In three years time, what percentage of your installed base will BroadSoft Hosted PBX/UCC service represent (users)? A: They are banking on BroadSoft. In just three years, service providers believe BroadSoft will power a significant portion of their installed base primarily by displacing premise PBX solutions. 19
20 Would you like to see an integrated view of the market that combines PBX and cloud data to highlight the transition to cloud? A: They want one market view. Industry analysts typically track PBX and cloud hosted communications market data separately. But service providers see real value in combining the two into a single report helping them better monitor marketplace shifts and the speed at which businesses are transitioning to the cloud. 20
21 3 Key Survey Take Aways Rapid shift from premise PBX and IP-PBX to cloud communication solutions across all market segments - small, mid-market and large Cloud UC (Unified Communications) and mobility are considered synonymous many SMBs will simply go 100% mobile is going to face challenges, as a host of new cloud-based tools becomes available Are you ready to make the most of emerging communication trends? BroadSoft s next-generation cloud communication and collaboration solutions unleash benefits that can ripple across the value chain to help Communication Service Providers capture market share, reduce churn and build their bottom line. Interested in learning more? Contact us at: info@broadsoft.com 21
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