Gartner’s Geoff Johnson is direct: "Do you want the bad news?”
Johnson, research vice president for Gartner Enterprise Communications Applications, says unified communications is heading one way – to a commoditised ‘very cheap, very cheerful’ offering courtesy of ‘the big players’. And that means change is afoot for the reseller network, who Johnson says will need to refocus their energies.
"The opportunity for the reseller channel is likely to be in systems and network integration and wrap-around professional services, rather than expecting to make money from selling and installing infrastructure,” Johnson says. "That’s something they need to put their thinking caps on and work out, because unified communications as a service (UCaaS) is a quiet sleeper at the moment.”
In Australia, Microsoft and Telstra have teamed up to offer UCaaS for AU$20/month as part of Telstra’s T-Suite Business Software. Johnson predicts New Zealand will see similar, ‘if not this year, then next’ and says once companies such as Microsoft start delivering via the cloud ‘you know there is a shift in motion’.
(For the record, Microsoft product manager Rachel Turney says Microsoft is talking to New Zealand telcos about its Lync Online offering, which is currently in beta testing. Turney says New Zealanders ‘are going to be given the choice’ and will be able to sign up direct with Microsoft, or go via telcos with billing and first level support provided by the telco.)
Johnson says UCaaS is a year or two away from popular adoption, but will appeal to companies because its pay-as-you-go format falls into ongoing operating costs, rather than requiring capital expenditure. He points out that early adopters of UCaaS elsewhere have been the small and medium-sized enterprises – the bulk of New Zealand’s market – and suggests transition to UCaaS in New Zealand, when it comes, could be rapid.
The case for CPE
But Johnson’s view isn’t universally shared. Cisco Systems sales/channels systems engineer Chris West says customer premises equipment (CPE) is still a major solution and customers aren’t putting off network infrastructure upgrades as they wait for UCaaS. "The cloud is certainly something which is moving forward – it doesn’t appear to be a flash in the pan,” West notes. But he says there remain issues with integration into an organisation’s back office systems, for example. "If you take telephony, yes, you can have cloud telephony deployed quickly and without the infrastructure expense. But if you want the whole unified communications – combined with back office applications – it’s not clear to me how it can be easily done. And until it can I think there will always be a case for CPE.”
Rasika Versleijen-Pradhan, IDC’s senior IT services analyst, New Zealand IT services market, says it is still early days for Software as a Service/on-demand UC here, and on-premises based UC solutions have a greater mindshare due to a lack of marketing by service providers around their UC capabilities and portfolios. "That is slowly changing,” she adds.
Organisations which lack in-house skills and budget constraints may opt for UCaaS, Versleijen-Pradhan says. "This will also be largely driven by the maturity and development of UCaaS solutions and the overall cloud market. IDC believes public cloud represents just a little over 1% of IT spending (hardware, software and services) in 2011.”
She says UC activity in New Zealand has remained ‘relatively low’ as many organisations struggle to identify key business benefits. However, IDC’s forecast for management study, which was conducted in 2010 and interviewed 157 New Zealand chief information officers, 42% of respondents planned to deploy UC within the next one to two years. "We’re also starting to see a number of user cases in the market place, ie, with videoconferencing/telepresence, but not yet the full deployment of end-to-end UC,” she says.
Application, Application, Application
Versleijen-Pradhan says the need for greater collaboration and productivity, the need for lower communications costs and a reduction in travel costs and the ability to expand an organisation’s footprint in the most cost effective way and gain a competitive share, are key business drivers behind adopting UC.
And Sam Williams, Zeacom’s vice president of business development, says applications are now beginning to drive the refresh of voice communications. "Instead of data trumping voice, applications are going to trump data. And applications are going to trump telephony.”
He says while we’ve seen a ‘technology refresh’ from analogue to IP phones, ‘fundamentally what we’re doing has not changed, we’ve just changed the mode by which we do it’. "If you check-in at airports like Auckland or Heathrow, chances are there will be a Cisco handset on the check-in desk and next to it will be a list with phone numbers. Staff still pick up the phone and punch in the number to make calls.”
He says with the introduction of Microsoft to the telecommunications market with Lync, things are changing. "We’re seeing CRM applications pushing out into business and being adopted more broadly. It’s becoming an app driven environment. Until recently the technology hasn’t been at the point where it’s realistically practical. Now, data speeds, infrastructure and software applications are sophisticated and well rounded enough.”
He says, at its heart, unified communications is about making simple tasks more efficient and friendly – click to dial so users don’t have to pick up a handset and dial; screen pops, allowing people to know who is calling and their details; or CRM integration allowing calls to be automatically directed to the contact centre representative who previously handled the caller. At a more sophisticated level diagnostic tools can be integrated into the process enabling companies to notify customers of a problem with a vehicle, perhaps, before it becomes an issue.
Cisco’s West says many New Zealand businesses are currently in ‘network readiness’ campaigns in preparation for adding mobility and video capability to their current IP telephony offerings. "IP telephony was just the initial phase – taking data and voice networks and combining into a single infrastructure platform. But, moving on, it is combining that into the desktop with things like presence info.” Next up? "The next step is not staying at telephony, but moving to desktop video. We are used to talking to people face to face and as we become more mobile, video calling will become more beneficial for people.”
Desktop video has been restricted by the need for ‘very grunty’ computers, but that processing power is increasingly available in both desktops and laptops, and some new cameras are moving the processing into the camera device itself, West says.
Mobile devices are also adding another facet to unified communications which can offer a single number for reaching people on their work landline, mobile – or phones outside of the office, as required. "It’s about cost savings, but it’s also about not having to expose all the numbers to the caller. They don’t have to know your mobile number,” West says. "And, the DDI stays with the employer, so they retain the customer instead of losing the database on the cellphone if the employee moves on.
Not so fast
But for all the potential, there are still issues and Williams says one of New Zealand’s key challenges will be the infrastructure to deliver bandwidth to make UC work effectively.
"Internet speeds in New Zealand are frustratingly slow and painful. Until the government’s ultrafast broadband comes into play or we have wireless at blazingly fast speeds, you will be hamstrung to deliver the processes to destroy standard options.
Cisco’s West says human nature also has a role to play in UCs adoption, with the move to presence causing discomfort for some who may feel the company is always watching their moves. "There is a mindshift involved,” he says. "And it’s something that may have slowed the adoption rate in the past.” He compares it to contact centres requiring staff to log in for work and the change of thinking required by staff un-used to having to log in and concerned the company was always able to check up on them.
He says concern about instant messaging’s potential to be used for ‘idle chat’ may also have hampered its adoption by companies in the past. "Where one organisation will embrace chat’s ad hoc ability to gain information quickly, others see it as unproductive.”
Land of opportunity
Says IDC: "For most organisations the adoption of UC is not just about using applications, but has the potential to transform their entire networks into highly complex converged networks. This increasing level of network complexity could see more organisations moving to a hosting or managed services model, which will require service providers to ensure they have the right skill sets to provide these services, as well as illustrate the benefits and efficiencies associated with this type of service.”
IDC estimates the UC services market in New Zealand was worth US$12.8 million in 2010, with revenue generated from consulting, integration and implementation representing about 44% of the New Zealand UC services market ‘which means that these services will provide the quickest wins for service providers’, Versleijen-Pradhan says .
"Considering that justifying return on investment seems to be one of the challenges for end-to-end UC roll-out, vendors should consider focusing on UC deployment for a specific business process that can help increase efficiency and productivity and slowly build a case for deployment throughout the organisation,” she adds.
Adds Williams: "The promise of CTI for the last 20 years is starting to see adoption, en mass. It’s a really exciting time in terms of UC – we’re starting to see the infrastructure and devices, in the form of tablets and smartphones; wireless networks and software get to the point where they come together properly.”