This article originally appeared in the April 2012 issue of INTERNET TELEPHONY magazine.

Hosted or on-premises? That’s the question when it comes to phone systems these days. What about the cloud? Whether you’re looking for voice, or more advanced unified communications services, these are the questions CIOs and CTOs are asking. 

How businesses answer these questions, and what factors weigh into their decisions, become determining factors for their vendor selection. If you choose to manage your own on-premises system, you have a choice of some very well-known PBX (News - Alert) vendors. If you choose the up-and-coming cloud model, you have an equally wide choice of vendors (though they may not be quite as well known, for the most part).

But what’s keeping the two alternatives as separate universes? Why can’t a cloud vendor also sell an on-premises PBX, or vice versa? As of today, it hasn’t truly become reality, but within a few weeks, when ShoreTel (News - Alert) finalizes its acquisition of M5 Networks, it will have created a new breed of UC vendor, one that can compete in both the traditional and hosted markets.

That was the message from ShoreTel CEO Peter Blackmore (News - Alert), opening the company’s annual investor day in San Francisco.  

It’s a brilliant idea – brilliantly simple, in fact, to borrow ShoreTel’s tagline. Today, there are cloud believers and detractors – those that are chomping at the bit to migrate to a cloud-based communications solution, and others that just don’t trust it and will stick to the old-fashioned, time-tested on-premises model. 

So, rather than expend resources trying to convert customers, why not simply offer a product selection that will satisfy both sides? A PBX vendor explaining why its solution is better than the cloud is typically seen as having a natural bias. By offering both, that bias is eliminated, replaced by a layer of trust.

The question, for Blackmore, was whether to buy or build but, after meeting with some 25 potential partners, it became evident that buying was the logical choice. Building its own solution would require significant R&D efforts that would take more time than ShoreTel could afford. The opportunity is here today. In two or three years, it won’t be. There will a market leader already.

“There is no big competitor in the hosted space, so I wanted to spend our shareholders’ money on a company that was already a leader in the cloud industry and in which I had confidence,” explained Blackmore. “By leveraging the joint companies, there is huge potential for us to be the leader in the cloud industry.” 

By that he means that he wants to capitalize on the opportunity to leverage the expertise of the combined businesses to not only continue growing market share in the on-premises business, but to take the competitive advantage the dual deployment models offer to become a leader in the cloud business as well.

“We have an inherent advantage in the competitive landscape, and we aim to keep it,” said Blackmore. “I feel passionate about it – we made some bold moves, and we have built up a great capability.”

Indeed, whether Blackmore, CMO Kevin Gavin, M5 CEO Dan Hoffman (News - Alert), or any of the other ShoreTel executives or customers who were on hand for the event at AT&T Park, home of the San Francisco Giants (a ShoreTel customer), there was no shortage of passion.

“We have a shared vision of the future,” said Hoffman. “Nobody in the market has put these pieces together.”

In fact, listening to them, it’s hard not to buy into the concept of brilliantly simple UC. And when you think about the potential of a vendor being able to offer two deployment models for the same solution, you realize ShoreTel has a special opportunity to become the new giant in town.