By Steve Leaden, founder and President of Leaden Associates, Inc.
We at BCStrategies have been closely watching the UC UCaaS and Contact Center (CC) CCaaS markets evolving. More and more enterprises are considering the cloud as an alternative to a premise-based solution in our consulting practice. In fact, every RFP that we are now issuing includes a cloud alternative, and some are considering cloud only.
Cloud Growth, Reasons to Consider the Cloud
So what are the reasons for this market move?
- A Move To OPEX Models – A move to OPEX models is becoming more of the “norm.” Subscription-based services such as Office 365 and Salesforce are just two examples of how the cloud has become a more accepted channel. Organizations in general are more accepting of a cloud-based model than they were just 24-36 months ago.
- UC and CC Are Complex – Unified Communications and Contact Centers are especially complex, and most CIOs I have spoken with consider real-time communications a “headache” and are less familiar with the real-time critical nature of Communications over other technologies and applications they are responsible for. Real-time communications is a different model than most software applications, and has shorter thresholds when anomalies or outages show up.
I have heard from many sources that “voice is just another application on the network,” yet it is the most sensitized to network fluctuations and anomalies and is the first to be identified by the organization with issues. The more a CIO can “simplify” and delegate their UC, CC, and data infrastructure, the better in some cases. - Faster Ramp Up Periods – Because the cloud data center model is already built by the provider, the ability to implement a cloud solution quickly typically provides the advantage of a faster ramp-up period compared with a premises-based solution. In addition, a cloud solution can expand quickly among endpoints and applications. Note that additional time is needed for a private cloud solution (dedicated servers) when required.
- Complexity of Projects Are Increasing – With trending in UC and CC towards newer technologies such as AI, IoT integration, blockchain, 5G, third party APIs, and CPaaS, among others, the market continues to grow and the caring for such new complexities and integrations increases. The omni-channel experience in Contact Center is also front and center (voice, web chat, video chat, email/faxing, and social media integration) which would require additional attention and professional services to advise and integrate such.
- Updates and Upgrades in the Cloud are Done “Seamlessly” – Most software upgrades and updates that are required in any UC or CC solution are performed behind the scenes without any user intervention in the cloud model. There’s also a reliability factor expected from the provider to perform such. In my experience, most of these upgrades are done seamlessly, but on occasion we have seen outages or marginalization of services after an update/upgrade.
Change control windows that are announced by the vendor are also no choice scenarios for the customer. Any organization taking on a cloud solution will need to work with the provider’s change control windows announced. - Cloud Costs Going “Down” – In our consulting practice, we are seeing a slow but steady decline in the monthly cost for a UC end point in the cloud. Where cloud costs were double that of a premise-based solution just a few years ago (using a seven-year TCO model), that variance has shrunk to 40-50% above premise. Long distance and SIP trunking are typically now included in the UCaaS model as well.
- In Some Cases, Less Staff is Needed – Depending upon the complexity of the project, in some cases moving to the cloud can be in the form of an outsourced model and therefore some staffing can be reduced. This will depend on the vertical and the complexity of the customer environment.
In the next few years, UC and CC will grow significantly, including both premise and cloud. According to Grand View Research, UC and UCaaS will grow to a $143.5B industry by 2024. Even more significant is Contact Center (CC premise and CCaaS), growing to $481B by 2024, according to Global Industry Analysts.
The UC Cloud is currently 6% of the total market share. New end points being “sold” in the cloud are expected to exceed end points on premise in the next three years.