UC Adoption: What's the Hold Up?

Like many analysts, incumbent vendors and new challengers, I too am convinced that unified communications will reshape how businesses communicate and that it will almost certainly turn out to be a multi-billion dollar industry.

But there's also a lot of discussion about low adoption rates in the SMB, where UC offers the greatest opportunities to derive competitive advantage in a dozen important ways. Customers want the technology. Solution providers want to sell it to them. What's the hold-up? Well, there are (at least) five prominent factors that are slowing UC adoption in the SMB market segments.

First, it's still not clear to the SMB why their investment is warranted. For example, by itself and even more so when paired with VoIP, UC promises to lower TCO and capital and operational expenses. What business, even a very small business, doesn't like to save money? But many UC solutions require investment in a whole new PBX system or PBX-replacement system to get minimal functionality. Not many SMB are rushing to pay tens of thousands of dollars just to get some basic unified messaging.

Second, productivity claims are often nebulous. Just about everyone agrees that unified messaging, teleconferencing, desktop collaboration tools, and so on, "reduces human latency" (that is, allows businesses respond more quickly, hopefully to their customers) and drives organizational productivity. Enterprises are already in the process of integrating their back office data stores with the communications and productivity tools of their front office customer service professionals. CRM systems are the most obvious example. But how does a particular UC solution solve a concrete business problem in a way that measurably lowers costs and drives productivity? If a solution provider can't answer this question for an SMB buyer, it will be a long sales cycle to be sure.

Third, the up-front prices of most PBX-based UC solutions are still just too expensive for what you get. No one is fooled by the cents/user/day model - UC from an incumbent vendor is still expensive and typically feature-poor from an applications perspective. This is in part because incumbent vendors still expect customers to pay for their overhead costs to develop hardware, and in part because the incumbents really don't understand the user-centric nature of UC in the way that true software vendors do. The good news for SMB customers is that software solutions and their solution providers are already reshaping the elasticity of the market and the cost expectations of customers.

Fourth, the cost to get to a working system is still much too high. If it takes 4 hours/desktop for an IT administrator to outfit a user with a phone, unified messaging, some basic call control, and other table stakes-type features for a UC solution, that's 3 and-a-half hours too long. Just imagine the professional services cost for businesses without the IT resource on staff: 4 hours multiplied by 100 users is 10 weeks of professional services at (if you're lucky) $1000/day. That's $50,000 just to get a relatively modest system installed - a serious deal breaker for most SMBs. When the up-front costs are so high, it makes the ROI a distant promise indeed!

Fifth, vendors haven't done the hard work that still needs doing to educate their solution providers and customers about how to solve key problems with UC. At Objectworld, we liken it to the transition from the calculator to Microsoft Excel. What you could do with a calculator has been and remains fairly sophisticated. But what someone can do with Microsoft Excel, with integrated OLAP, pivot tables, and so on, is quite profound. Now, most people may continue to do a monthly budget with Excel, but the opportunity to do other things is still there. And if a business faces a choice between buying an employee a new calculator - with an arcane interface and a seriously limited ability to help that employee be productive except in certain specific ways - or Excel, and the price is about the same or less expensive to buy Excel, it seems clear that buying software instead of hardware is the right choice. This rules out most UC solutions from the get-go.

Why isn't UC seeing the widespread adoption that everyone predicts and seems so reasonable on its face? SMBs look to serious value for optimal solutions for their money today, not solutions that may (or may not) come in handy someday down the road. Vague promises about saving money or driving productivity, not to mention expensive up-front and deployment costs, won't cut it with the typical SMB buyer - and they shouldn't. SMBs are wisely waiting for the right solution to come along at the right cost to solve a specific problem.

David Levy is President and CEO of Objectworld Communications (www.objectworld.com).