The Unified Communications (News - Alert) as a Service (UCaaS) market experienced massive growth in 2014, driven by business adoption as well as an abundance of technologies and services. In fact, MarketsandMarkets forecasts the market will reach a whopping $23.34 billion by 2019, up from the impressive $13.10 billion it brought in last year.

This growth trend has created massive opportunities for everyone from telecom operators to MSPs to local and regional interconnects. TMCnet had a chance to speak to Alan Rihm, CEO of CoreDial, which offers UCaaS and other hosted and cloud-based services, about the evolution of the market over the past year and where it is headed. According to Rihm, the number of UCaaS adoptions increased tremendously last year as well as the number of service providers offering solutions. The space also became quite fragmented, with many new players vying to capture enterprise IT and communications market share.

“Last year, UCaaS graduated to a valuable and viable approach to enterprise communications – for small businesses and global corporations alike,” said Rihm. “This turned into a large, addressable market amongst small and medium-sized enterprises where interconnect, MSP and carrier partners are able to play to their strengths and deliver UCaaS. These SMBs represent a rich opportunity for local and regional service providers to tap. With the right partner, they can enter the market and build valuable businesses and shape an offering that appeals to their customer base.” 

The allure of UCaaS is its flexibility and mobility along with cost reduction and overall streamlining of communications. Businesses can get more bang for their buck by implementing UCaaS and without having to make significant infrastructure investments. This also makes it a compelling service offering for MSPs, interconnects and carriers in helping them meet customer demand while playing to their strengths. Yet when it comes to cloud services, the channel at large can be hesitant to make any drastic changes.

“Simply put: the channel is hindered by its reliance on selling traditional products,” said Rihm. “It is natural for businesses to resist such a large change, but the risk of change must be weighed against the long-term benefits of adopting cloud services into a businesses’ portfolio. By partnering with a SaaS (News - Alert) platform provider, these businesses can get the support they need, with minimal financial risk to prepare them for 2015 and beyond customer demands.”

He added that a recurring revenue model is a major benefit of UCaaS, enabling service providers to reap the rewards of a recurring revenue stream. And a continual flow of cash protects businesses from unexpected market changes while enabling them to predict customer usage on a monthly basis, leading to better overall business planning.

The strength of the UCaaS market is expected to lead to five major trends in 2015, according to Rihm:

1. Accelerated growth. Last year we saw a significant increase in UCaaS adoption, and this will continue into 2015 as more SMBs see the benefits of UCaaS and adopt the delivery model.
2. A stronger channel. We will no doubt see a stronger IT channel in 2015. SMBs will increasingly look to their channel partners to simplify their IT and provide them the right mix of solutions.
3. More MSPs. We’ll see an increase in MSPs joining the UCaaS market. They had a tremendous amount of success in the UCaaS market in 2014 and are recognizing that they already have the business models to deliver UCaaS as well as the skills to sell and support these services.
4. The pressure is on interconnects. With more and more businesses entering the UC space, interconnects will need to evaluate their business model and ensure they are catering to their customers wants. This means adding hosted or hybrid solutions to their premise-based offerings before other players do so first.
5. The industry has a huge opportunity. Beyond just UCaaS. This is just the beginning of an even bigger opportunity in serving SMB demands, and proves that when businesses start to understand the value of hosted services and recurring revenues, they will adopt them.

For more on all the latest technology and trends happenings, be sure to register to attend ITEXPO, the business technology event that brings together service providers, enterprises, government agencies, resellers, vendors and developers to demo, discuss and network all the latest innovations changing the marketplace. ITEXPO (News - Alert) is being held January 27-30, 2015, at the Miami Beach Convention Center in Miami, Florida.   Stay in touch with everything happening at the event -- follow us on Twitter.