Unified Communications in 2013 - Reality Check

Rethinking Communications

Unified Communications in 2013 - Reality Check

By Jon Arnold, Principal, J Arnold & Associates  |  May 20, 2013

When I talk about rethinking communications in this column, it’s hard not to include unified communications on some level. As much as this is a nice problem to have, it’s still a problem.

The good part of the problem is the simple fact that UC covers most all the tools we use every day to get our work done, so virtually any type of business can benefit. The bad part of the problem is the not-so-simple fact that UC covers all these tools.

The bigger picture promise of improved productivity is a great selling point, and for the most part, the technology can deliver if deployed right. However, among the analysts and consultants who follow UC, we know how difficult that value proposition can be to understand, let alone support a business decision to invest in it. With all the vendors chasing customers with various flavors of UC, they risk making it an all-purpose solution. Of course, their motivation is keep customers in the fold as they migrate to VoIP or graduate up to UC. As a result, the UC concept has become pretty amorphous, and if vendors aren’t careful, it can become as generic as legacy telephony, and there’s not much future in that.

Vendors have struggled with this dilemma for some time, and things aren’t getting any easier in 2013. Businesses are still trying to extend the life of their legacy systems to manage shrinking budgets, and without a tangible cost reduction story, they’re still hesitant to move ahead with UC. Some definitely understand the productivity angle, but others remain skeptical, leaving most of the buyers in the realm of early adopters.

Greenfields and PBX (News - Alert) replacement scenarios are no brainers for UC, but in a stagnant economy no vendor can count on the former to build a business around. Given the long life spans of legacy systems, the organic turnover for replacement is under 10 percent, so you need much more to make a go in this market.

This may seem like a gloomy scenario, but the outlook for UC is actually pretty good. Not everything moves at Internet speed, and that’s certainly true for UC. For any market to truly hit its stride, demand must be the driver, and not supply. UC vendors are constantly tweaking both the value proposition and the deployment models, especially now that cloud has emerged as a force in the communications space. Not only will this help make UC more saleable to IT decision makers, but also for the channels, through which most of the business flows. We’re not there yet in 2013, but we’re definitely on the right track.

To quantify this bright future, I’m going to cite some high-level data points from a recent report you should take a closer look at if you’re still on the fence with UC. The study is titled “Unified Communications (News - Alert) & Collaboration Market 2011-2016”, and was recently jointly published by COMMfusion LLC and UCStrategies.com. On a global basis, the research pegs the 2012 market at $13.4 billion, growing modestly to $20.8 billion by 2016. Clearly, there’s a large opportunity here, but no hockey stick takeoff is expected. Their forecast works out to a 9.1 percent CAGR – not terribly exciting, but totally respectable given a weak economy.

I should also explain that this market sizing is based what the research calls “UC capable”, which is larger than another definition called “True UC”. The report explains this in detail, especially around the challenge of defining – and measuring – what exactly constitutes UC. In short, the nature of UC is as difficult for seasoned analysts to understand as it is for IT decision makers, which alone helps explain why this market is taking some time to become mainstream.

The key here, then, is setting realistic expectations as to how UC’s future will unfold. For those who are patient and think things through, the payoff can be great – for businesses, vendors and channels. There’s a lot to understand, but there are a lot of benefits, and that’s why UC will eventually find a home in most all businesses.

To better articulate this, I’d like to add some thoughts from the study’s author and analyst colleague, Blair Pleasant (News - Alert), who is president and principal analyst of COMMfusion, and co-founder of UCStrategies. “Collaboration is becoming a business-level driver now, and tools such as conferencing, document sharing and presence are key enablers. UC does all this and more, and with distributed workforces becoming essential to support global operations, the value proposition becomes even stronger.”

Another factor that will drive growth is the ability for vendors to support truly integrated solutions, not just with their own applications, but from other vendors and applications ecosystems. Standardization has long been a work-in-progress with all things IP, and as that advances, so will the demand for things like UC.

As Blair notes, “most companies are deploying the various UC components as silos. Businesses are used to using their applications in isolation, but in time, they will see greater benefit from integrating them. Our research supports this, and we expect to see integrated solutions accounting for 40 percent of the UC market by 2016.”

To sum up, just because UC isn’t on every desktop doesn’t mean it can’t help your business. Someday it will, and maybe you just don’t know it yet. There are great solutions out there right now, but you need more than technology to make a market. A lot of other things have to line up around that, and it’s clear to me that process is well under way. If you want to know just how well under way all that is, Blair’s report has those answers, and after you follow up with her, I hope to see you back here in the next issue of INTERNET TELEPHONY magazine.

Jon Arnold (News - Alert) is principal of J Arnold & Associates, an independent telecom analyst and marketing consultancy with a focus on IP communications, and writes the Analyst 2.0 blog. Previously, he was the VoIP program leader at Frost & Sullivan.

Edited by Stefania Viscusi