Hosted UC still going strong for service providers despite recession

With hosted unified communications (UC) and telephony, service providers can generate new revenues even while delivering cost savings to enterprises.

Telecoms looking to drive new services revenue despite an overall drop in IT spending might find some solace in

managed unified communications (UC) services. Analysts project that this services market is still growing in the recession.

Telecoms continue to report customer successes with hosted UC, particularly when they can pitch the services as a cost-cutting measure for SMBs that cannot afford to manage the services in-house.

"It's definitely an interesting time for the market for managed services, as it is for any market at this point, because companies are pulling back so much of their spending," said Amy DeCarlo, a senior analyst at Current Analysis. "I think [UC] ... is one of the areas that could be relatively stable."

DeCarlo said service providers that can pitch the service as a way to cut costs could see some serious wins. She is not alone. A 2008 Frost & Sullivan report drew the same conclusion, noting that hosted services are popular as a way to avoid high capital expenditures when upgrading offices.

Hosted UC is even penetrating the enterprise markets, where larger companies are seeking to outfit branches with IP telephony without the hassle.

DeCarlo said the hard savings on supporting voice alone make hosted IP telephony a compelling story, and adding in UC integration with other services made an "up-sell" a no-brainer in some situations.

"In terms of productivity, those are harder to quantify, but [service providers] can point to examples," she said. When those examples include lower travel costs or reduced call center waiting times, even those so-called "soft savings" can mean a lot to the bottom line.

SOURCE, a Dallas-based communications vendor, has been able to tap into this hosted UC trend, particularly since it converged the services it offers onto a single platform. SOURCE had offered a variety of services, ranging from IP telephony to email to messaging, but the services were built with technology from different vendors.

SOURCE switched to a more integrated approach, provided by Zeacom, and has since seen a spike in customer interest, according to Kevin Grantham, director of strategic delivery at SOURCE.

"Today's environment is trying to do more with less, so companies that have the need to bring to bear a number of technologies don't want to reach out to four or five different vendors, as they have in the past," Grantham said. He added that an integrated approach like Zeacom's is much more appealing to customers looking for a consistent, easy way to access their unified communications.

And ultimately, the comfort of having a single, reliable point-of-contact for critical communications infrastructure can be a very compelling sales pitch as businesses look to offload the very expensive, messy work of communications -- especially when a service provider can take advantage of scalability to better manage these communications.

And despite all the hype Cisco and Microsoft have built over the past few years about unified communications, customers often do not want the flashiest implementations. Instead, they are demanding something that simply works consistently.

"A lot of companies are looking at fairly large implementations, and this is a strategic operation that requires a lot of integration," DeCarlo said. "They don't want anything experimental at this point."

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