UC Overlay Approach: Big TCO Winner for Enterprises

From the beginning, the argument for Unified Communications has been clear:

We have a dozen or so new technologies that can change how people and enterprises work! If you can examine the work in your enterprise, you can probably find the places where these new technologies can provide breakthroughs for your people and your operations by streamlining communications. This is the reason that the UCStrategies tag line since 2006 has been, "Communications integrated to optimize business processes." It's the optimization, not the technology, that makes the difference.

But what does this cost? Is UC going to break the budget? Well, not so much, when we look at the facts. For the past two years, we have run three parallel RFPs at Enterprise Connect:

1. Unified Communications without buying a new IP-PBX. In other words, just keep your current PBX and "overlay" UC functionality for the users. Almost all of the UC vendors support this configuration; even the IP-PBX vendors will configure their systems, without phones, to work with an installed, legacy PBX.
   
   
2. Unified Communications as part of buying a new IP-PBX. In this case, the RFP asks for an entirely new IP-PBX, phones, and features with all the UC functions included.
   
   
3. Unified Communications as part of an IP-PBX in the cloud. Essentially the same as for RFP 2, above, but the solution must be provided as a cloud (or at least a hosted) solution.

All three RFPs were on the same template of a 2,000-user, three-location enterprise. The UC functionality included Presence; Instant Messaging; audio/video/document sharing from the UC client on PCs/Macs/tablets/smartphones; audio/video/document sharing conferencing; mobility features for laptops/tablets/smartphones; and the software for communications-enabled business processes (CEBP).

Following Enterprise Connect the three consultants who conducted the RFPs normalized the total cost of ownership (TCO) for all vendors across all three RFPs. This made sure that the TCO for UC without a new PBX included maintenance and hardware refresh of the continuing installed PBX. Also, since the hosted or cloud solutions usually included trunks and toll costs, similar premise-based costs were added to the TCO for the other two solutions. You can download and read an overview of the report here. Remember, the core prices for products, licenses and services were submitted by the vendors!

The results are very clear, with two key messages, as shown in the following graphic of the TCO for each of the three options, by year:

The key messages are:

• The most economical way to add UC to your Enterprise is to add exactly UC to your enterprise, not to buy UC as a set of features in an IP-PBX package. Even though UC without buying a new IP-PBX solution (Overlay) includes the costs and the staffing to continue to run the current PBX, it is still about 20 percent less costly, on average, than installing and owning UC with the new IP-PBX.
  
• The hosted and cloud options are not yet competitive with on-premise solutions. Sure, there are some less expensive cloud providers of Voice over IP (VoIP), but these RFPs required inclusion of the new UC features, in which case those cloud costs increase significantly. The UC overlay solution can be purchased for less than 50 percent of the five-year cost of the cloud or hosted solution. Of course, the On-premise and Overlay solutions require up-front investments, but those investments can be easily (and cheaply, these days) financed to smooth out the cash flow; the cloud-based or hosted solutions usually require multi-year contracts, too.

Besides the TCO advantages, there is also the huge advantage that the Overlay solution allows the enterprise Telecommunications and IT teams to focus directly on the UC solutions, without wasting months, quarters or even years in replacing the PBX and phones before they can even begin with the new UC solutions that are the real reason to make the new technology investment in the first place.

Let us know what you think. If you have questions, please post them hear or write to me.