Feature Story

The Perfect Storm: Hosted Service, Microsoft and the Cloud

By Paula Bernier, Executive Editor, IP Communications Magazines  |  April 01, 2011

This article originally appeared in the April 2011 issue of Unified Communications

There’s a storm a-brewin’, and it’s gonna be a whopper.

This famous pronouncement (or something very close to it) was made by the scarecrow in The Wizard of Oz. But it could just as easily be applied to the cloud and hosted services trend that is sweeping through the communications landscape.

Everybody and their brother seems to be floating cloud and hosted services offerings, and business software giant Microsoft is among those stirring things up on this front.

"As cloud-based services are hotter than ever, the latest iteration of hype within cloud is around hosted real-time services – specifically with regards to Microsoft's hosted communication-based solutions,” says VBrick's (News - Alert) Vice President of Marketing Michael Rubin. “We're seeing a dramatic and interesting shift of replacing outdated, one-dimensional communications systems with multi-layered hybrid models operating in the cloud that not only support the usual enterprise chat and voice deployment but also rich media video streaming.

“We see serious growth in the future of hosted Microsoft-based services in the cloud including unified communications offerings – for example the ability to stream live and on-demand video for corporate broadcasts and departmental collaboration," Rubin concludes.Companies like Aviva, the U.K.’s large insurance company, are among the types of organizations that are implementing such hosted services.

Brent Holman is unified communications architect and Microsoft specialist at systems integrator and managed services outfit XETA Technologies Inc., which PAETEC (News - Alert) recently announced plans to buy. He says that XETA started out with a premises-based offer that involved setting up servers at customers’ data centers.

Today XETA also sells Microsoft Office 365, the business productivity suite formerly called BPOS, Holman says. Microsoft Office 365 is what the software giant is talking about when it refers to delivering business applications from the cloud. It includes support for collaboration, e-mail, SharePoint and more – all from Microsoft’s hosted data center.

But not everybody will want every service or feature to be hosted, or based in the cloud, says Holman, adding that Microsoft is not interested in hosted voice due to regulatory issues. So, because of regulations related to voice services, a customer with 15,000 might choose to go with a premises-based setup involving Lync for voice, but have other Microsoft-based applications accessible via the cloud, he says. XETA can help enable these mix-and-match scenarios for customers.

Whether services are enabled by on-premises infrastructure (managed by an outside entity or the organization itself) or live in the cloud, however, what’s important is that businesses offer an array of communications options that address the needs of different interest groups and requirements, addsRobert Ritchey, director of solutions engineering at XETA.

He notes that for the first time, there are now four generations in the workplace at the same time. Generation Y tends to be more comfortable with newer technologies like instant messaging and video. But members of the older generation may prefer telephone conversations. In the end, everyone needs to adapt to use whatever method of communications is available and makes the most sense for the requirement at hand.

But a wide array of communications options makes for a better experience for everyone, and the integration of these different options is necessary to deliver the most user-friendly and efficient solutions, Ritchey says, noting that Microsoft offers a wide array of applications on this front.

 More on PAETEC and XETA

PAETEC recently announced its plans for yet another acquisition. This time that involves the purchase of XETA Technologies Inc. for approximately $61 million.

The soon-to-be-acquired is a systems integration company that also can assist business customers by monitoring and managing their networks. Basically, the deal, which is expected to close in the next month or two, appears to be an effort to reinforce PAETEC’s position as a solutions provider (as opposed to a dumb pipe outfit). It allows PAETEC to take care of business customers from cradle to grave, as they say.

"This transaction highlights our strategy to increase our capabilities to service enterprise CIOs beyond traditional telecom products with advanced managed services and cloud computing solutions," says Arunas A. Chesonis, chairman and CEO of PAETEC. "PAETEC and XETA have a consistent national footprint and customer base while offering complementary services. As a result of this transaction and combined portfolios, both companies will have far stronger value propositions for our customers."

PAETEC, which has over the years evolved from a fledging CLEC to a FORTUNE 1000 company, delivers business communications – including IP, voice, data, and Internet services; enterprise communications management software; network security solutions; CPE; and managed services – to medium and large businesses in the United States.

A 29-year-old company with more than 16,000 U.S. customers, XETA is focused on Fortune 1000 companies. Its marquee customers include Marriott, Starwood Hotels and Time Warner (News - Alert) Cable.

XETA got its start delivering a call accounting package to the lodging industry. It still does that today – and has a big push around not just lodging, but also government, health care and other verticals. XETA does systems integration work, customer network management and help desk services.

It has expertise with a wide array of network solutions, including those of Alcatel-Lucent, Avaya, Hitachi (News - Alert), HP, Juniper Networks, LifeSize, Microsoft, Mitel, Samsung and ShoreTel. But it’s not about the gear, emphasizes Robert Ritchey, director of solutions engineering at XETA.

“XETA is not a box-selling company, and we don’t want to be one,” he says. “We’re a professional services solutions provider – we’re an integrator of systems.”

The company, he adds, gives customers “one throat to choke.”

XETA also offers Day 2 and beyond support. The company has its own network operations center and help desk. The NOC (News - Alert) actively monitors customers’ network elements, if they want to offload the management of that to cut costs. And it has its own call center and data centers.

Edited by Stefania Viscusi