UC in 2013: UCStrategies Experts Look Ahead

In this Industry Buzz podcast, the UCStrategies Experts do a quick look back at 2012, then turn their attention to 2013 in respect to the following major trends in unified communications:

• UC adoption
• Cloud and hosted
• Mobility
• WebRTC
• Federation
• Video

Jim Burton moderates the discussion, and is joined by UC Experts Marty Parker, Don Van Doren, Steve Leaden, Phil Edholm, Blair Pleasant, Jon Arnold, Michael Finneran, Dave Michels, and Kevin Kieller.

Jim Burton: Welcome to UCStrategies Industry Buzz. This is Jim Burton and this is our end-of-the-year podcast where the UC experts talk about market direction - where we've been and where we're going, with a little more focus on where we're going. We've divided it up into a number of topics that we'll cover during this: UC adoption, cloud and hosted, mobility, WebRTC, federation, and video. We have people who will be leading each of those discussions. We're trying to cover these things, and we know there's a lot of other things we can talk about and there are some subtexts that we'll be talking about in a number of these, such as BYOD, following part of mobility, and the future of devices. But I thought it would be good to get started with UC adoption and there's two parts of this that UCStrategies follows pretty regularly. It's what's happening with UC adoption, what's driving it, who's making the decision, and where is it headed? The other part is the future of what we look at as traditional voice driver component of that.

So I'm going to start with Marty Parker to talk about UC adoption, and Don Van Doren will step in and talk about voice direction. Marty, take it away please.

UC Adoption

Marty Parker: Well thank you, Jim, and happy holidays to everyone and a happy new year to you as well. UC adoption in 2012 has been kind of like watching the tide come in. Almost every vendor in all three categories - remember we talk often about three categories of deployment for UC - one is by building on your voice infrastructure, another by building on your desktop applications and a third by building on your business applications. In all three of those categories the vendors are adding the communications capabilities into their license kits in such a way that the customers are increasingly entitled to unified communications licenses. And therefore, each department is claiming they have what they need. This is turning the deployment of UC, once you go past the licensing and get around to deployment, into a very interesting political battle where each of those constituencies tries to argue, "Well I can do that, I can do that, I can do that."

As it turns out, it looks to me going into 2013 and beyond, the battle is going to be won by those people who can package what they have as applications. Whether it's applets on a mobile device, apps on the desktop, communication built into business applications and work flows, communications built even into social networks. We're going to see, I believe, that UC will no longer be deployed as a pure UC client. UC will be deployed as part of some application or work flow initiative and that would be my prediction for the future of this industry. Jim, back to you.

Jim Burton: Thanks, Marty. Don can you give us some of your thoughts about where the future of the voice component is and whether that's leading and driving everything or whether that's actually changed?

Don Van Doren: Thanks, Jim. I feel that 2013 is really going to be the year when it becomes widely apparent that voice communications can no longer be a standalone business system. Of course, we at UCStrategies and other similar groups have been talking about this transition for a long time. When I say "widely apparent," what I mean is recognized by a broad segment of commercial purchasers as well, people out in enterprises that are making these kinds of buying decisions. Obviously it's not that voice communications is going to go away, it's just that it becomes increasingly better to include this capability as an add-on to something else or else in the different delivery model. I think this - obviously this trend has been apparent for some time, I mean cell phones and other mobile devices have siphoned off huge volumes of formerly PBX-based traffic. Peer-to-peer communication volumes are also ramping up of course; there are many factors that are accelerating this trend. A few examples are Microsoft's integration of Skype into some business applications. We've got tool kits from a number of vendors, Twilio and a lot of others, to enable embedding communications in other applications and devices. We've got the potential of WebRTC, and we're going to hear a little more about that I think in a few minutes. But that can shift communications to any browser. And of course, there is the shift in video from only specialized rooms into desktops and other kinds of devices everywhere. The third area that I think is really going to take off in 2013 that will help accelerate this is the fact that it's becoming increasingly easy to incorporate voice communications into a broad spectrum of business application software. These three factors will accelerate the trend away from traditional PBX-based voice traffic. Certainly there are going to be opportunities for voice-centric communications, I mean especially in important markets like call centers. Three-quarters of the traffic in call centers still comes in over traditional phones. I don't see that changing a lot soon despite the advent of other interesting mobile applications, and more sophisticated self service and customer portal apps, all those things. They're coming, but voice will still be important there. But I think overall it's clear to me that in 2013, it will become increasingly obvious to a broad spectrum of buyers that a voice-centric communications platform, irrespective of how it's disguised and clearly a lot of the vendors are currently trying to do that, but I think it will become clear that this cannot be the hub of an internal and external business communications solution. Back to you, Jim.

Jim Burton: Thank you, Don, appreciate that. Phil, if you could just take a couple minutes because this is something you and I have been talking about, and it's something that I know you could talk about for hours, but just some concepts of how you see the trends changing in voice communications over the next two-to-four years. This may be a little bit early but I think it's wise for people to get a sense of where the industry may be headed when it comes to how voice will be treated in the future and how people will look at what they commonly think of today as the PBX.

Phil Edholm: Absolutely. I think there are kind of two comments here. The first comment is very much on Marty's comment; it was interesting, one of the clients I worked with this year had exactly that. They had their group that had Lync available because of their Microsoft licenses and the group that represented their Cisco deployment which they had for voice, which had Jabber available and the choice was, "Which do we use as our IM client and therefore really driving UC?"

And what became very obvious was that for the organization it was a decision that was much less around technology and much more around the politics. And I think, to me, that actually brings the other side of something that we've talked about for a long time about UC. Going back to the early days of UCStrategies, there was always this identification that there were two sides to UC. There was the collaborative knowledge worker side to UC we're all familiar with, of UC collaboration, focused to end users, how they work with other end users. But we always talked about the other side, the business side. The UC-B or it's been called CEBP, communication enabled business processes. What I think is a very interesting trend that we began to see in 2012, and I think is really going to accelerate in 2013, is more and more people being comfortable with having the business process be communication-enabled, the business application. Not through integration - integration with the telephony system, but really totally separately. And I think that's an interesting perspective because I think that again, politics has been one of the biggest barriers to the deployment of CEBP. You know, if the business apps people bring it up when they go talk to the telecom people, it's how do we integrate them together? And it ends up falling apart. If the telecom people bring it up through a product like the Ace product, when they go to the business people it's too complicated.

The minute you begin to say that the user, through either BYOD or devices or technology we'll talk about like WebRTC, can actually have a separate communication channel from the traditional telephone for those applications. And users are beginning to get used to doing that because they're doing it on their cell phone and they're doing it on their browser, they're doing it on other devices. I think all of a sudden we're going to begin to see a lot of the communication deployment moving out of the traditional communication platform that's telephone number-oriented and dialing oriented into these systems. So I think that's going to be a big trend in 2013; obviously there are going to be big challenges for different kinds of organizations with that, but I think that's going to be a real different trend. It will be interesting to look at the end of 2013 at what percentage of overall communications in an enterprise are no longer done through the traditional PBX but actually through other services around it. Where I think today it's still a small percentage, but I think it's continuing to grow literally month by month.

Jim Burton: Great, well thank you Phil. So let's move on and mobility is the next on our list and let's turn that over to Michael Finneran.

Mobility

Michael Finneran: Well thank you very much, Jim, and I'd like to add my holiday wishes to everyone as well. First a quick look back at 2012: clearly we saw the emergence of the duopoly between iOS and Android. Those really - basically rigiditized the market to a degree, which means it's going to be a lot more difficult for other folks particularly Microsoft and RIM, the Blackberry folks, to be breaking in. But really, probably the biggest thing we're seeing is that the mobile solutions are really outpacing UC. To Marty's point earlier, we don't have any adoption problems, people love this stuff and there is very little in the way of politics to get in the way, either, and the reason is that the mobile industry is delivering great solutions. Not really better than we see in UC, but certainly more convenient. Of course again, they can be more convenient because they're focused toward more personal, more consumer-oriented goals. So we still need better business-oriented tools but business always gets short shrift when it comes to the mobile market; we've always known that. But for 2013 it's a pretty easy prediction. I predict much more of the same and as mobile rises, we expect to see a de-emphasis on things like desktops and laptops, the traditional tools, they'll still be there, but the tool of preference will be the mobile one. And it will be increasingly on a BYOD model.

I don't see BYOD going away; all the surveys I do with end users more than emphasize that. Of course, that also means that companies will have to continue to come to grips with things like mobile device management and mobile security. So those will be big growth areas in enterprise mobility for the coming year. On the app front we've mentioned apps a few times but most what we've really done on the app front thus far is B-to-C. What I'm really hoping for, though I'm not readily expecting it in 2013, is really a move to more of those mobile communication enabled business processes, mobile CEBP, which really targets now more B-to-B and B-to-E applications.

I think we probably have another year more yet to still come to grips with the changing landscape brought about by BYOD. But hopefully 2014 we'll start moving in that direction; so back to you Jim and over to anyone else who has anything to kick in on the mobile front - I know we're all into this.

Blair: I have a couple of things I'd like to add about BYOD. I definitely think that BYOD, of course, is going to be big and lots of enterprises are going to be doing that. But I think we're also going to see a lot of what ShoreTel called "CYOD," or, "choose your own device." And that's going to be where instead of just letting workers bring in whatever device they want, it's where IT departments are going to let workers choose from several approved devices. So they're going to expand the offerings and the number of devices that workers can use, so it will be sort of a happy medium between "just bring anything," and "just use what the organization provides." So I think it's going to be more of the enterprises offering an expanded range of devices that the workers can use from what the workers can choose from. Instead of full-blown BYOD I think it will be more of this "choose your own device" from the IT departments.

Steve Leaden: Blair, just one other footnote here from my vantage point. We do a lot of work in the health care space and we're seeing mobility being used, especially requests by physicians that want to use their mobile device rather than being at their desk because they are mobile in their practices; they want to hide caller ID from their phone as they're making outbound calls to patients - mainly using the land line. We're starting to see applications at the mobile device for patient check-in, check-out, patient status, even access to electronic health records and I even recently saw an EKG portable device that could be snapped onto a Droid device. So it's very, very interesting to see how the market is evolving around mobility.

Dave Michels: I think in 2013 we are going to see a normalization of BYOD. I think BYOD is a very inconsistent term that we use as if we all agree on what it means. There are organizations that believe it means any device - any network. There are other organizations that believe it's any device on this menu. There are other organizations that say it's any device on this menu and we retain the phone number should you leave or something like that. There is just all kinds of ambiguity on really what does BYOD mean.

I think that in 2013 we will see it come to mean any device, any network. I think that the way that the security issues will get resolved on BYOD will be through virtualization and I am looking forward to that actually - I think that is going to be a good answer.

Cloud & Hosted

Jim Burton: The next subject is cloud - and we're merging cloud and hosted together and this is a topic that I think is so important that at the UC Summit we're going to spend a lot of time and focus on that. That's not to say that we're not going to talk about other topics like WebRTC, which we'll talk a little bit later, but we will have a significant focus on cloud at the Summit this year. And to start us off on cloud discussion, Steve Leaden.

Steve Leaden: Thanks, Jim. I think what's really prefacing the cloud and the enormous interest in it is that I read a statement recently in one of the IT magazines basically stating that there's an enormous amount of pressure on every CIO out there that requires delivery of all these new applications much more rapidly then they've had in the past. So when you use it as a base line, and by the way, there's little capital available with many firms these days, depending upon the firm and the enterprise obviously. Then you have this enormity of delivering on all of these applications, and you have staff that's been right sized to the Nth degree, you have to look at other resources and a way to manage that. So the cloud becomes really the delivery model and in many cases it's not about - in fact in most cases that I've experienced there's little to be saved in the way of a cloud technology. But it's really more about for lack of a better word, outsourcing some of the skill sets, or bringing in some of the skill sets that you just don't have internally any longer. And it also allows you for a much more rapid deployment then you would typically have in a capitalized kind of environment. And Gartner Group has quoted 36 percent annual combined annual growth right getting to a $2.2 billion dollar market for cloud by the year 2015. I've also seen that some of the contact center-based cloud vendors are actually predicting and planning on up to 40 percent of all annual sales now being in the cloud. And that's very interesting knowing that call centers and contact centers per say are a bit more sophisticated in the technology than your traditional kind of admin desktop. So there's a couple of things that go with it, number one, it's obviously very disruptive because it changes the whole capital model now to an operations-based model, and it's definitely very disruptive to the channel at large and how is being a channel really going to respond to that?

Some of the manufacturers have actually come up with some very smart programs that will allow for some level of capital up front as though you were going to sell it, being the VAR, or channel, and then recovering on some of those dollars later on. We're also seeing a migration from the SMB market where it's become pretty adaptive in the public space now more to private clouds. We're very involved with a very, very large (exceeding 6,000 end point) national cloud rollout right now. And the biggest driver on there was strategic and in this case actually it was cost savings as well. So really it comes down to a couple of things, some of which the market is actually maturing and we're seeing that the market is actually dropping the price per seat by as much as five to either percent since the year 2011 and we're expecting that price-per-seat to again go down in 2013 and on. So I think the cloud is going to be getting a bit more affordable as we go forward. And we're also seeing that about 18 to 30 percent of all firms nationally are using the cloud to some degree. And then the third variable here is the fact that contracts that used to be 36-48 months for cloud-based opportunities are actually going down to 12 and even only 24 months. So it's very disruptive trend, and I don't think there's really anything stopping this train and it's here for the long term I believe, Jim. Back to you.

Jim Burton: Great. Jon Arnold, can you give us your thoughts on cloud?

Jon Arnold: Thanks Jim, and I'll just kind of add a bit to Steve's comments with cloud because I totally agree. I don't want to repeat everything that Steve said but it certainly is a very disruptive trend and yes, we'll see more of this coming up in 2013. And I just want to add to the disruptive element that clearly all of the telecom-based vendors have a huge job ahead of them because they're whole business is built around premise-based solutions. We saw a little bit of what I think what's to come at the ShoreTel event a couple of months back, where they have kind of - they're trying to burn the candle at both ends offering both premise and cloud-based solutions. I think they'll be a pretty good barometer to see how well the market adopts because it is very early. It's a case where the cloud technology is actually not the issue. The issues are really around the viable business model that the channels can actually understand and sell and of course a value proposition that the businesses can invest in. Steve's comment about the contract lengths getting shorter is another issue, as it is with any hosted service where there are no major commitments because it's not a capitalized expense. So that puts a lot of the pressure on the vendors and providers to really deliver product because the danger here of course is that cloud services can become commoditized very quickly because there is such a lack of physical commitment to infrastructure. So really at the slightest hiccup businesses really do have choices to leave and I think that's going to make it really challenging for the providers to do the job, and of course the channels to support it.

I think it will be very interesting to watch this year on a vendor basis how Avaya fares versus how Microsoft does. I think Microsoft is actually very well positioned for this trend mainly because they have no vested interest in the phone space. So by going to Office 365 they're already well down the path for a cloud-based business, and of course Skype is a wild card for them as always. They have some pretty good pieces in place that could ride this trend pretty well.

Conversely, I think Avaya in particular is going to struggle here; we're seeing evidence of that on a few different levels in the market place. But clearly there's a lot to be had by going to the cloud, especially for the small business and I think that's really where we're going to see some pretty promising growth since it will be giving these types of companies a first - a first true chance at getting into this whole range of applications. And when you start layering on the mobility and WebRTC capabilities and even the video pieces that would be relatively new for them, supported by the cloud I think they're going to really see the value in going down this path. And that's going to be a challenge for the premise-based vendors to stand up and say, "Hey we can do the same," because it's going to be a little harder.

So I think that there's going to be a lot to watch for and I think all of the trends we've been talking about on this call are going to come into play with the cloud during the year. Thanks and I'll pass it on back to Jim.

Jim Burton: Thanks, Jon. Dave Michels, let's hear from you.

Dave Michels: At UCStrategies we have been talking about the cloud for several years now. And during that time, it has been growing and maturing. I think we are really crossing over the threshold here (2013), arguably in 2012, where it is mainstream accepted. There is a growing acceptance of outsourcings, a growing acceptance of the cloud, and there's an increasing commoditization of unified communications. So commodities are often dictated by price and if UC communications are not as strategic as they once were and if it's something that can easily be outsourced, it will be.

Thirdly, SMB has been proving the cloud for the last several years and we're seeing larger and larger accounts adopting hosted services. I think we are really going to see the enterprise grab it in 2013. I also believe that we will be seeing a general switch off, a mass migration toward the cloud, starting in 2013. That migration will take a long time, but I think we are going to continue to see very impressive growth rates in hosted services and flat rates in premises.

WebRTC

Jim Burton: Great, thanks a lot. The next subject is WebRTC, so Phil I'm going to ask you to do two things for me. One is to give a really brief background of what WebRTC is, and then kind of give us your thoughts about the trend for next year.

Phil Edholm: Absolutely, so very quickly I can explain WebRTC in maybe three sentences. The first is WebRTC essentially turns browsers into real time communication engines by adding into a browser a real time media engine where the control of what you see in a soft client is in HTML5, but the browser can now talk to another browser using WebRTC, though WebRTC is not really limited to browsers; it can be anywhere. The big change that WebRTC is going to bring is, it basically does the same thing to communications that the original web and browser did to information if you go back 20 years ago. Where it used to be if I had a server and if I wanted to exchange information with you, our servers had to talk, the browser and the web allowed me to point my browser at your server and get the information I want. And that obviously in the last 20 years has spawned a couple trillion dollars of value, 50 to 100 million web sites, a billion users and things like Facebook and Google, etc., etc.

Basically WebRTC does exactly the same thing to communications where instead of me telling my server, i.e. my phone company to dial your phone number, I point my browser at a web site that represents you and I have instant communications including all the capabilities. I think the thing that's really interesting about WebRTC is, if we had done this talk back in December of 2011 it might not have even been mentioned. For example, last year in the beginning of the year at Enterprise Connect there was a single panel on WebRTC; it's now a focus event. There was an event in San Francisco, a WebRTC Conference in November that drove over 300 people very quickly. It's becoming a hot topic, a hot technology. If you look at the rate of change, it is the thing that has changed the most in 2012. I think what we all need to realize about WebRTC, the one number I will leave you with is that the prediction from Google and Mozilla is that there will be up to 1.5 billion WebRTC devices by the end f 2013. So this is a technology that by the end of next year, up to 1.5 billion people will actually have it on a device and be able to go to a web site that has WebRTC and immediately be able to have real time communications. I think for all that reason - all the areas we've talked about today whether it's BYOD, it's cloud, it's next generation systems, it's contact center, it's UC adoption, it's the whole thing about CEBP. I think WebRTC in the end is going to have huge impacts on all of those topics. I think it's a huge transformation that's coming in our industry. So that - I'll throw it back to you Jim with those as comments.

Jim Burton: Great, thanks a lot Phil.

Federation

Jim Burton: Our next topic is federation. Kevin let me turn that over to you.

Kevin Kieller: Thank you, Jim. Well I look back and at the beginning of this year I predicted that 2012 would be the year of federation. And certainly for me, there was a big announcement - that was the Microsoft announcement that Lync and Skype would be federated. And also that the Lync organization was being made part of the Skype team at Microsoft.

So maybe I was a year early, but I certainly think that into 2013 we'll see increased federation opportunities. So maybe 2013 will be the year of federation. And what's very important about federation is that we really already have two federated communication platforms - the PSTN, so I can call you regardless of where you are and whether you are on a mobile phone or in another country, and that all works. And then we have email - so I can email you and the email will travel through multiple systems and it will get to you somehow and you can reply.

But certainly with UC federation, that opens up other opportunities, so now I can choose the best communication path to reach you and then building on what Don said earlier about voice systems not being stand-alone systems any more, I see the federation and the ability to communicate with multiple modes and choose the mode that's best for me - is something that supports Don's point where into 2013, I think we will see more UC systems, as opposed to just voice systems that sometimes never grow up to be a UC system. And with that - back to you Jim.

Jim Burton: Thanks a lot, Kevin.

Dave Michels: Hi, it's Dave Michels and I just wanted to say that I am not so optimistic about federation making a lot of progress in 2013. I think that federation is an important thing that needs to happen and we are seeing it at some very simple levels. But really, unified communications has proven the value of presence. We are seeing like systems embrace presence so that you have two companies that work together that are on the same kind of platform and they have the means of federating their systems.

The biggest breakthrough in 2012 was Skype and Lync (actually technically that would be 2013) - Skype and Lync federating, but again, that is kind of a variation of a like system, since Microsoft owns both of those now. I think federation is actually holding back the industry between disparate systems. I think it will be a big breakthrough when it begins to happen and I am not even seeing the beginnings of that yet.

Video

Jim Burton: Our last topic is on video. Blaire I'd like to turn that over to you please.

Blair Pleasant: Yeah thanks Jim. Video is obviously going to be really hot. The number of video conferences I've been doing is increasing and now whenever I join a web conference I have to check to see if the video is enabled. And every vendor analyst conference I go to has demos on their video capabilities and there are lots and lots of new players now trying to displace the room-based video with desktop video. And there's also lots of vendors focusing on providing interoperability between the different video systems out there. And in 2013 we're going to see lots more of this interoperability which is going to make it easier to deploy video in the enterprise.

And also people are getting more comfortable using video and we're going to see a huge uptake in the coming year. The gating factor right now of course is bandwidth and also bad hair days, but we will see a big rise in the use desktop video - that's pretty much inevitable. There are also new video products from companies like Logitech for Business, Blue Jeans networks, Vidyo and also the traditional vendors like Cisco and Avaya are leveraging their video acquisitions, Tandberg and Radvision. It will also be exciting to see what Microsoft is going to do with Skype in 2013 and that's going to have a huge impact on our use of video since most people do use Skype in one way or another.

Also Phil talked about WebRTC and I saw lots of very cool demos at the WebRTC event in San Francisco focusing on video and as WebRTC takes off there are going to be lots more video services and capabilities offered. So once we get past the interoperability issue and the bandwidth issue, I think video really will take off and I think that's going to happen in 2013. Thanks, Jim.

Jim Burton: Thanks a lot, Blair. Phil I know you've got a couple comments on video, give us your thoughts. Thanks a lot Phil.

Phil Edholm: Thanks, Jim and Blair. It's been an exciting year in video. I think, if you look at video, 2012 was really the year we changed from what we'd always had in video which was room systems and kind of more traditional video, to the real emergence of desktop video.

A couple major dimensions of change: obviously, Avaya and its purchase of Radvision; all the major players now have a video strategy. And those video strategies really are extending to desktops. That, combined with open interconnect companies like Vidtel and Blue Jeans, really are bringing video to the forefront.

I think what's really exciting is if you look forward to 2013, we're really going to begin to see video be used not just the way it's traditionally been used as travel avoidance, but in new ways of doing business. When video is easy, the concept of, you know, middle managers using video to make sure they've got commitment to projects; teams using video to make sure there's attention; eliminating what are called "meeting tourists," from just coming to meetings and just sitting and listening on an audio bridge. All of those new capabilities, new functions of using video can have a significant impact on organizations. And I think this is really the year where we'll begin to see video dramatically change.

Finally, BYOD, whether you look at it in an iPad and technologies like WebRTC, really begin to enable us to put video easily on lots of devices, and that begins to open up new doors for video and video applications. So I think video is really an exciting change, and something we all need to be really, really, aware of in 2013. Thanks, back to you.

Jim Burton: Thanks a lot, Phil. That concludes our discussion for today. I'd like to thank you all for joining.