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Frost: Hosted Business VoIP Providers Must Ensure Interoperability with UC Applications

March 20, 2009

By Patrick Barnard, Group Managing Editor, Business VoIP

Like practically every other market segment, the hosted IP telephony market is being challenged by the economic downturn. As such, hosted business VoIP providers must help their customers get more out of their phone systems and achieve faster return on investment.

One effective way for them to do this is to ensure that their systems can be easily integrated with other unified communications (UC) applications, such as chat, presence and conferencing, as well as business applications such as CRM and ERP. In fact, a new report from Frost & Sullivan, North American Hosted IP Telephony Service Markets, shows that hosted business VoIP providers must achieve these integrations if they are to survive in this highly competitive market.

According to the report, there were close to one million installed hosted IP telephony lines at the end of 2008. Frost predicts this number will grow to about 3.6 million lines in 2014.

“Small businesses will continue to be attracted to hosted IP telephony offerings primarily for cost-efficient voice communications, although some of them will also choose a hosted offering for the ability to gain access to a complete UC package from a single provider,” said Frost & Sullivan Global Program Director Elka Popova, in a release. “Medium and large businesses will also appreciate the economies provided by hosted IP telephony, but will seek such solutions mostly so they can focus on core business processes and gain access to applications and capabilities that they can test without making a capital investment.”

While integration with other applications can help the hosted business VoIP providers win new customers, vendors making premise-based PBXs are also doing everything they can to bring UC capabilities to their systems. According to the report, “IP telephony vendors will have to develop astute channel strategies since most market participants are small, next-generation providers with limited geographic presence and service support capabilities, and with no established customer base or brand-name recognition.”

The report suggests that hosted business VoIP providers will need to expand and diversify their channels and strengthen relationships if they are to survive in an increasingly diverse competitive landscape: Competitive LECs (CLECs), software-as-a-service/hosted application providers, value-added resellers and system integrators are now all competing for a share of the business VoIP market.

Frost predicts that channel support will in part determine each provider's chances for success: Business VoIP providers should cooperate with hosted contact center, email, customer relationship management (CRM), Web 2.0 and other communication and business application providers. This will enable them to diversify their offerings – i.e. through integration they can still help businesses seeking inexpensive voice communication packages, while at the same time offering advanced communication solutions such as UC to those businesses seeking to do more with their business VoIP phone systems.
“In order to ensure extensive customer reach and superior customer support, service providers need to develop stronger relationships with various VARs, SIs, and agents that may include real estate companies, IT consultants, and moving companies,” notes Popova. “Further, providers should seek to develop an eco-system of partnerships to jointly enhance market awareness and be able to offer customers a range of interoperable solutions and capabilities.”
The North American Hosted IP Telephony Service Markets report is part of Frost’s Enterprise Communications Growth Partnership Service program, which also includes research in world enterprise telephony platforms, extending PBX functionalities to mobile devices, world unified communications platforms, and North American VoIP trunking service markets.
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Patrick Barnard is a contributing writer for virtual-pbx. To read more of Patrick’s articles, please visit his columnist page.

Edited by Patrick Barnard

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