The Evolving Opportunity of Unified Communications
The rise of cloud and mobile technologies, combined with customer demand for comprehensive and easily managed services, has led to an increase in as-a-service markets. UCaaS is projected to grow to a nearly $25 billion market by 2020.
The rise of cloud and mobile technologies, combined with customer demand for comprehensive and easily managed services, has led to an increase in as-a-service markets. Unified communications as a service (UCaaS)—which encompasses the internet, video and web-based conferencing services, voice, email integration and mobile connectivity—is projected to grow to a nearly $25 billion market by 2020, up from $15.1 billion in 2015.
The changing nature of the sector, which is shifting from on-premise solutions to cloud-based ones, serves as a microcosm of the market as a whole. Recognizing a trend in the making, The VAR Guy reached out to several sources for insights on what’s driving the market today.
What’s fueling the market?
Vishy Gopalakrishnan leads the strategy and execution for the Voice & Collaboration portfolio at AT&T, and he says the growth of the UCaaS market is fueled by an increase in both supply and demand. People want the smooth, painless convergence of communication technologies they experience in their personal lives to be available at the office, too. And as companies become more distributed, virtualized and global, IT administrators are on the hunt for more powerful collaboration tools that work with existing infrastructure.
On the supply side of things, says Gopalakrishnan, innovations in cloud-based, mobile-first collaboration technology are creating ways to integrate all the disparate technologies that have become essential to 21st century business into a single infrastructure that streamlines procurement, deployment and ongoing management.
Indeed, the rapid rise of the cloud is far and away the biggest impetus for evolution in UC technology. Tom Tuttle, senior vice president of UC Strategy & Global Alliances at Nectar Services Corp., says where businesses are struggling isn’t with the actual cloud technology. It’s in managing the integration and deployment of so many platforms, software solutions and new best practices.
“We still feel that well more than 50 percent of issues that come up are on the enterprise side of the network, not on the cloud side,” says Tuttle. “So the play we see for partners, those managed service providers and distributors, is to focus in on trying to provide visibility and tooling for that client side of the network.” In other words, businesses need help making sure they have the Wi-Fi bandwidth to support that afternoon videoconference or the ability to access their file-sharing service from their mobile device while in their quarterly board meeting.
“We see an increased focus around monitoring, reporting, diagnostics, management and, ultimately, SDN capability,” he says. “That’s the essence of a lot of the discussion we’re having with our partner community.”
In the past, the need to have insight into diagnostics and to be able to gain a comprehensive, end-to-end view of communications is what kept traditional VARs loyal to OEM-specific product lines. But today’s business environment requires a mix of vendor technologies, and providers need flexibility in choosing which services and products to incorporate into their UC offerings. What’s more, with the increase in the number of different technologies needed for effective business operations today, VARs that wish to be a one-stop shop for their customers’ connectivity needs may not have the bandwidth to become certified and trained in each different product line that they sell.
A number of creative services are therefore emerging in the channel as traditional resellers look for ways to increase their value both to end customers and other channel partners. Rochester-based Finger Lakes Technologies Group is one such company stepping in to fill the gap created by the advent of cloud. The company recently created a white label, Cisco-based UCaaS offering for partners that lack the resources to obtain Cisco certification or keep up with the engineering demands of a hosted VoIP solution. How did FLTG create a solution that would allow them to compete with the big communications companies? They bought a fiber network.
“We’re able to provide this service because we’re a telephone company and a VAR at the same time,” says Paul Griswold, owner, president and CEO of FLTG. “When we used to sell phone systems back in the day, we’d put the phone in then wait for the telephone company to show up. Today, in our business, we’re both at the same time.” Which means partners that use FLTG’s services as an element of their offering can claim hosted VoIP capabilities without buying their own network, and Cisco expertise without the investment associated with certification. FLTG’s solution is turnkey, offering everything from billing to support to integration.
This kind of second wave unified communications is exactly where partners looking for opportunity in this space should cast their nets, says Tuttle. The framework has already been built by the pre-cloud giants, by the Ciscos and the Microsofts, the AT&Ts and the IBMs. The cloud provides an opportunity for the channel to innovate quickly, efficiently and very creatively—as-a-Service at its finest. In particular, Tuttle says the best way for partners to leverage the scale that’s already been developed is to develop a managed service offering around the services they’re already providing. This provides today’s VARs with revenue opportunities both on the products they’re reselling and on providing professional services and ongoing support.
That monthly recurring revenue model is the brass ring that VARs are reaching toward as they stretch to adapt to the plummeting of one-time sales. “When we were in the Cisco business years ago,” says Griswold, “it was box sales. You sold the box to the customer, five to seven years later you came back, you upgraded everything and you sold them new stuff. Today, we sell a lot of managed services.
The next evolution
So what does the UCaaS of the future look like? In the near term, customers will want increased employee productivity. Therefore, they will increase their investments into collaboration and communications technology.
“Sharing will be the default, video will be the new voice, collaboration will become frictionless, and collaboration will happen on a global scale,” says Gopalakrishnan. “Additionally, a lot of these capabilities will start to be embedded into business processes and employees’ everyday lives.” That could provide an opening for channel partners to jump in and help companies establish best practices and streamline their UC capabilities.
Tuttle says the rise of hybrid deployments offers another a near-term channel opportunity. “A great deal of our work effort this year will be on that correlation capability,” he says. “Being able to quickly understand how an overall typology is working across very dynamic deployments will be very common within companies. It’s that ability to create that single pane of glass view because you’re trying to limit the number of different data sources or tools that somebody may have to use in order to look at these complex environments.”
The future holds some cool technological developments, as well, particularly in virtual and augmented reality solutions for business. Gopalakrishnan says the big potential for virtual reality (VR) is in helping diverse, spread-out teams work more closely together. “VR could one day become one more communication mode in a “unified” solution, to help distributed colleagues interact as if they’re side-by-side.”
“Take an assembly line employee at a widget factory for example. If her widget-making machinery breaks, she can bring up a VR conference with an off-site widget-making expert to explore and resolve the problem. VR or augmented reality will offer a whole new dimension of collaboration.” And as VR and augmented reality technologies become more ubiquitous, new UC solutions will provide a bridge between those who have the hardware to support VR and those who do not, giving the channel a whole new area in which to build service offerings.