By Doug Allen

If youre looking for a bit of trouble, its easy enough to find by bringing up unified communications. Anointed as one of the hot convergence technologies over the next several years, unified communications has stirred up a lot of talk about what it is and isnt. Its also been the cause of feverish debate between hosted provider and premises-based equipment vendor executives, who can work up a righteous rage when it comes to choosing the better delivery approach from the cloud or on-site.

Thankfully, its an argument that VARs, agents and systems integrators can sit out. The truth is, the key to growing the still-emerging UC market lies in the kinds of flexible and customized integration that these players excel in; those that offer their customers the most options stand to win big. The hosted IP telephony/UC market alone is pegged to hit $15 billion in revenues by 2015, according to a Frost & Sullivan report. But to do that, these partners will have to come to grips with a confusing array of implementation possibilities that go far beyond the hosted vs. premises-based controversy.

First, lets define our terms. While the list of communication/messaging elements as well as IT apps that comprise a UC solution can vary widely, there is general agreement on the basic components: voice/VoIP, mobility, video calling, unified messaging, presence and IM/chat. Basic conferencing and collaboration through audio, video and Web session also are typically included. A unified client portal allows customers to monitor and manage these services separately or in combination.

Beyond these, though, theres some disagreement over which features belong on the basic UC menu and which are more advanced. Some, such as Bob Barnes, executive vice president sales, marketing and business development at hosted provider CallTower Inc., would add e-mail, calendaring and contact management to the first list, and then move to more advanced functionality such as voice-to-text, fixed-mobile convergence (extending full landline PBX functionality to mobile phones), voice mail integration and document storage and management with integrated presence.

And the possibilities for higher-end features dont stop there. Moving upscale, fellow hosted provider Thinking Phone Networks  offers integrated business intelligence and analytics to its core UC functionality. Similarly, another UC provider, Alteva LLC, differentiates by adding HD voice to its VoIP service, tied to collaboration apps such as Microsofts Office Communications Server, Live Meeting and Microsoft SharePoint. And some vendors, such as Polycom Inc., are talking about UC federation, or interworking multiple business partners UC systems.

Definitions tend to vary beyond these core elements depending on point of view. IT-focused managers tend to associate the space with data collaboration file sharing and viewing and audio conferencing, while hosted VoIP providers tend to focus on interconnecting voice with other services. More and more, the accepted definition of the key components of any UC platform involve the ability to communicate from any device and participate whenever you need to, said Michael Brandofino, executive vice president of video and UC at AVI-SPL Inc., an audio and video conferencing provider that partners with Cisco Systems Inc. and Polycom.

The Debate

The arguments for outsourcing services have been well laid out and can be compelling. Generally, outsourcing avoids high upfront capex equipment costs in exchange for significantly lower recurring monthly costs and can lower the total cost of ownership (TCO) and risk for businesses with a mix of large and small branch sites. Solutions are more flexible and scalable and often offer a wider array of features which can further cut costs. IT chores such as maintenance, monitoring and integrated management (including moves, adds and changes) migrate to the network cloud, freeing up larger businesses IT staff to focus on their core competencies, which is especially attractive for SMBs who often lack sufficient IT staff and resources to deploy a full-featured solution. In addition, outsourcing allows the full set of features to be implemented across many sites.  The customer also can take advantage of the providers third-party expertise to add new features relatively quickly and cheaply, as well as turn up new business locations or users, all over a single, redundant network infrastructure.

But theres a tradeoff. Premises-based systems may impose a lower TCO over the life of the system, especially for businesses with relatively few, large sites. These solutions often offer a broader feature set and potentially faster upgrades across a small number of locations. And, perhaps most importantly for the most risk-averse, customers can fully control and secure the solution to ensure privacy and data integrity.
Both approaches have drawbacks, too. Hosted services depend on the network WAN and customer access links to provide the necessary QoS and reliability, factors generally out of the customers control. In addition, services can be harder to customize without direct customer access to the system.

By contrast, premises-based systems bear high upfront and ongoing IT support costs and can lock the customer into a single-vendor solution. Interoperability between different UC systems is also trickier.
Clearly, both approaches can make sense for a given customer, depending on their IT budget, feature requirements and degree of security and control desired. Why then all the fuss about the best way to deliver UC?

Some of the arguments boil down to simple self-interest: equipment and software vendors want their enterprise customers to invest in their products directly, while providers obviously want to leverage their network assets to serve as many customers as possible. It is always a love-hate relationship between the service providers who try to leverage a shared infrastructure across multiple customers versus those companies who want to sell more equipment and software, said AVI-SPLs Brandofino.

People are debating because different parties have vested interests in the different business models, said Elka Popova, North America program director, unified communications, information and communication technologies at research firm Frost & Sullivan. It is about accurately anticipating customer demand and investing in R&D, channels, etc., to support one or both delivery models.

There may be more consensus among vendors and providers than there appears, though. Several CPE manufacturers, such as Polycom, offer solutions for the end-user and for providers, taking a both is best approach to the market. Meanwhile, many hosted providers tout network- or cloud-delivered UC as the way to go because its not proprietary and large customer segments apparently are willing to sacrifice control for a turnkey solution in a down economy, but are also ramping up managed services, which allows the customer to outsource management chores while maintaining control of their own CPE.

Outsourced managed services often affords customers more control than hosted, while software assurance contracts and some managed services programs also provide software updates, said Rob Arnold, principal analyst at Current Analysis Inc. According to most industry reports, the managed services industry is growing quickly.

VARs to the Rescue?

As with just about any complex solution that demands interworking, VARs, partners and system integrators have a crucial role to play in just about any kind of UC deployment. The complexity of UC implementations, especially in multivendor environments, requires a significant vendor or channel partner implementation and integration expertise, said analyst Popova. Most vendors are, therefore, looking to partner for the delivery of expert consulting and professional services. Intensifying competition and consolidation in maturing communications markets are also driving an increasing vendor focus on expanding their channels.

And its not just about integrating all the myriad pieces at play in a customized implementation. Theres a huge learning curve to address as well, for both the customer and their partner. The definition of UC continues to evolve, said analyst Arnold. Meanwhile many businesses are just learning of VoIP.

Altevas Hayner agreed. The No. 1 hurdle is education and awareness. Most channel partners, VARs and end-users are not aware that you can buy a fully integrated hosted UC solution today. When the end customer asks for this type of solution, then everyone wins. But the first step is making them aware that it even exists. The provider does what it can to educate their partners and resellers through Lunch and Learns, webinars and partner events, something that should be part of every service providers channel partner program, according to Hayner.

One key to driving customer awareness of UC solutions, particularly delivered from the cloud, is to move the conversation from a tactical discussion about resolving particular business requirements to a more strategic dialogue on just how the customer ideally wants to improve their business processes through UC. Speaking of his companys channel providers experience in selling cloud solutions, Steve Kokinos, CEO of Thinking Phone Networks, finds best results where their consultative skills are put to use in a way that makes customers feel like the channel partner is interested in the success of their entire technology infrastructure indeed their entire business rather than just on making a phone equipment sale.

Put another way, part of the partners consulting tasks lies in helping the customer find ways of changing their business dynamics to make the most of the opportunities being brought to the customer with the evolution in the available technologies presented with the hosted [in this case] solution, added CallTowers Barnes.

In addition to consulting and network/solution design, integration remains the name of the game for partners. Here, its important to lead with a proven track record with applications that are likely to be in demand for a customized UC solution. Customer relationship management database integration and contact center call routing are common examples of this, although certainly not required through all stages of most companys UC deployment.

Moreover, customers are looking to partners for real insight into the demands UC places on the network, especially for CPE-based services. VARs and system integrators expertise in needs analysis, implementation design, consultation and ongoing evaluations brings considerable value to the business, said Bernard Gutnick, senior director of product marketing at Shoretel Inc., which focuses on VoIP and UC CPE. UC implies integrated voice and data which requires QoS in the network. The partner community adds a tremendous value by working with the customer to understand QoS and to ensure it exists and is implemented correctly to support IP telephony and UC capabilities.

Some partners still see integration as the biggest hurdle to a successful UC implementation, especially where customers already are running their own messaging solutions in parallel silos fashion. And some applications may lag others in functionality, much less interworking. Video communication is still a new technology lacking some of the tools and maturity of the voice world, said AVI-SPLs Brandofino. In addition, customers may have gone down a particular path and have customized their solutions for audio or Web. The existing platform may not support the latest features and capabilities, creating a situation that may require replacing long-standing applications and retraining entire organizations.

Its no surprise then that UC vendors like Polycom are pushing for open standards that allow VARs and SIs to take advantage of APIs so that interfaces with other business systems can be easily established. Its important that the point of integration be flexible too; either at the UC vendor server, which then feeds the end-station client, or at that client PC itself.

At the end of the day, partners will find themselves probably most challenged by just keeping up with the myriad UC solutions out there, trying to figure out which is the best fit for their widely varying customer base (even when targeting specific vertical markets). Its important to be able to offer best-of-breed solutions, and in some cases their service components, in an a la carte or bundled fashion, pulling from multiple vendors and/or providers, regardless of whether the customer is going the hosted or premises-based route. Because in the end, that partner unfortunately, must act as the single throat to choke, the one who is responsible for designing and installing the UC solution, as well as business process linkage and ongoing maintenance and support and of course, for the ultimate success of the solution.

Selling the UC Solution

For all the customer interest in UC, making the sale can still be tricky, for a variety of reasons. One is the need to learn new skills in the space. Some UC VARs may be more used to an equipment sale, rather than a hosted platform, which can pose a daunting learning curve to the uninitiated.

The partners that see the most success are selling UC to their existing base and thus give the agent a stickier product when replacing circuits, said Daniel Passacantilli, president of Blue Front Telecom Group, a Thinking Phone Networks partner. I also see success when partners find the right customer in this economy and offer a new hosted UC system for the same or less than [the] current spend while adding a huge upside in terms of integrated functionality and features.

According to ShoreTel, its resellers are enjoying record highs in sales, and it all boils down to making a clear business case for UC. Just how does it improve communications, and how does this in turn increase productivity? Thinking Phone Networks Kokinos agreed, stressing the need to demonstrate real, hard-dollar benefits and productivity enhancements that businesses need to see from UC before they will commit to a purchase.

Its all about speeding up the pace of business. For example, as Polycoms Yankey pointed out, its UC solution can route customer calls to multiple phones with simultaneous ringing and avoid time lost leaving voice mails, use presence/IM to make sure the customer is addressing their message to someone whos there to answer or scan and access voice mail more quickly from an e-mail Inbox.

Since a total UC solution is comprised of so many elements, a shotgun, one-size-fits-all sales approach wont work. Arnold also recommended a more consultative strategy, one that identifies which business requirements are best-suited to a UC solution, which can be tricky when its less visible or soft benefits are so often hard to quantify.

This entails developing repeatable strategies that appeal to specific vertical and departmental requirements, said analyst Arnold. Finding champion users during pilot deployments can be helpful to overcome some of these soft ROI issues. Some of these soft ROI points come from the UC implementation rather than through impacting business communications. ShoreTel claims its solutions can lower overall costs by 90 percent from savings in labor, power, software renewals and other factors.

The sales cycle may also be shortened for those partners and VARs that offer a slow migration path to UC for the customer, who may be frightened of rip and replace scenarios. Some customers appreciate a more gradual, step-by-step plan towards UC implementation. Tricia Cooper, director of channel marketing for North America at Siemens Enterprise Communications, finds the companys most successful resellers often sell UC in three stages. Stage 1, first selling [customers] on the benefits of migrating to IP telephony; stage 2, upgrading them to specific, centralized applications, such as unified messaging and conferencing; and stage 3, complete migration from PBXs to fully integrated UC. Subscription-based pricing also can help entice customers to add UC on a hosted basis, since this eliminates the capex costs of a premises-based solution and simply adds the recurring UC costs to the partners existing monthly maintenance contract.

Final suggestions? The most important thing for resellers, according to CallTowers Barnes, is to find a quality partner that you trust not to jeopardize existing customer relationships by introducing services that are not the best available.

The Middle Way

Though much of the controversy over UC centers on the hosted vs. premises-based debate, few would deny the importance of a third option that incorporates both of these delivery methods, offering the customer whats sometimes called a hybrid solution. These seek to outsource those UC elements that are most complex to a provider and/or partner, while keeping those that demand greater privacy or control on-site.

Essentially, the hybrid approach offers the best of both worlds, ideally combining flexibility and cost reduction with full customer management of their most critical functions. Think of a business that wants to keep its own PBX, but looks to a hosted provider for presence/IM services as well as IT apps such as e-mail (although some customers find e-mail sensitive enough to keep in-house).

This approach also makes sense for risk-averse businesses seeking a phased deployment, although the balance between the number and type of UC features hosted or run on-site can vary widely. Hybrid UC allows customers to get the most out of their existing equipment investment since other UC elements can be added in a complementary overlay fashion. The idea clearly has traction, as evidenced by Microsofts foray into the hybrid UC space.

VARs can help their customers decide where to source their communications services by identifying and taking on those elements that are more well-established, cheaper and easier to manage, leaving the rest to service providers and their partners.

And providers are already starting to see the growth of this hybrid model, if Alteva is any indication. Hayner reports rising demand for combined solutions, particularly among businesses that may be willing to outsource their PBX, but arent ready to make the jump to cloud-based apps.

For instance, an organization was interested in our hosted VoIP, but was not ready to release their RFP until 2011, which means that the revenue would not be realized until later 2011/early 2012, said Hayner. During this time, they were also evaluating their hosted Exchange platform and we were able to secure that client because we offer a fully integrated solution that allows for a la carte options; adding our hosted VoIP will be a natural next step for them.

Looking for More?
Join us for the session, “Hosted vs. Premises UC,” at the Fall 2010 Channel Partners Conference & Expo, Sept. 20-22, in Washington, D.C.  For more information, visit www.channelpartnersconference.com.