Unified Communications Retrospective - Prospective

21 Dec 2014

Year-end seems to bring reflection on how we got here and where we're going. Here's this year's version.

My journey with Unified Communications (UC) began in 1998 in a strategic planning session combining the Lucent Enterprise messaging and Octel (acquired by Lucent in mid-1997) product, sales and marketing leadership teams. The team created an innovative vision (for the time) of a "portal" where the user could log in for access to all of their communications tools. For me, that was the beginning of Unified Communications. That team in Lucent, later Avaya, proceeded to build just such a portal, released in 2001 as the Unified Communications Center with voice, video and sharing for PCs and mobile devices. That first version of UCC was offered as a separate product, not as an add-on to a PBX license. Got top billing in the first Gartner Magic Quadrant for Unified Communications 2003.

The big inflection point, though, was in 2006. As an independent consultant and a co-founder that year of UCStrategies, we saw John Chambers announce Cisco Unified Communications on the main stage at VoiceCon (now Enterprise Connect) with the tag line, "This changes everything." And so it did for many of the firms in the industry. Over the next five years, we saw all of the PBX producers build UC into their products so that UC was just another feature - a bit flashier than transfer and hold and not quite as expensive as the contact center features. By 2013, we stopped having a separate "UC without a PBX" session at Enterprise Connect because all the vendors were essentially at base feature parity and were bundling these UC features into their PBX pricing. The PBX RFP included the UC requirements and was sufficient for the purpose.

Then, as UC became consistent across the industry, the marketing teams got busy with differentiation (often propelled by a new VP of Marketing and/or business unit leader) so that the term UC was eclipsed by the adaptation of words like Collaboration (Cisco and many others), Conversations (Unify), Engagement (Avaya), or Universal (Microsoft).

The actual growth and revenue from UC is a very interesting picture. UC has sparked some significant revenue growth. That revenue growth is masked in most of the IP PBX companies, since the functionality is bundled into a single license that includes the PBX. Cisco, however, offers 5-tier pricing for Collaboration 10.x that clearly has premium pricing to match the added-value of the advanced UC/Collaboration functions; while Cisco does not report the portion of their licenses in the CUWL category, clearly those premiums above the User Connect Licensing (UCL) are all attributable to Unified Communications and Collaboration features, not to IP PBX and VoIP functionality.

Other UC solution producers, such as Microsoft, Google, start-ups in collaborative workspace software, and some video solution providers, are reporting significant growth rates, primarily because they start from essentially zero revenue. Yet the reported and inferred revenues from these non-traditional providers of "UC" add a significant growth vector to the industry total.

So, how does this reflect on where we're going? Here are three main points that come to me:

1. Communications should be part of our work, but should not be work. As we have said from the outset at UCStrategies, the future will be about how communications is used in the work that people need to do, also known as their job, their workflows, and their business processes (i.e. "communications integrated to optimize business processes"). The big money in communications is the labor we are spending in wasted, redundant, or inefficient communications. One estimate shows this payroll cost could represent as much as 21% of revenues for businesses and governments around the globe. If even a 10% reduction could be achieved in these costs at a 100% first year ROI, the new "UC" industry revenues should be over $1 trillion per year, not the paltry $30 to 50 billion per year that the industry, including IP PBXs, now produces. So, whether the incumbents or the innovators seize this opportunity, the growth will come from integrating communications technologies into how we work.

2. Collaboration communications will be provided in collaborative workspaces. The 25% of workers whose job is based on collaboration will be compelled to work in collaborative workspaces. Communications technologies, beginning with text and sharing with options for voice or video interactions, will be either included in the kits or available through integration with available communications systems. The purpose and effectiveness of these collaboration tools is well documented. The choices are numerous; many are brand new and a few are well-established and broadly used. New products include Cisco's Project Squared and Unify's Circuit as well as many others' innovative products per this review by Brian Riggs. Yet the powerhouses in this category will be the established products from IBM and Microsoft (see 2012 post) as well as others in the Leaders quadrant of the Gartner 2014 Magic Quadrant report for Enterprise Content Management - OpenText, EMC, Perceptive Software, Hyland, and Oracle.

3. Transaction-based communications will be provided from within software applications. Increasingly, the essential communications in the minute-to-minute work activities of the other 75% of the workforce that is mostly transaction-centric are being built into or integrated into the application software, rather than provided by a separate IP-PBX vendor's phone or software client. We can already see this as more and more people learn to use, or are born using, apps on their mobile devices. Of course, those apps and those devices are already comm-enabled. Also, a major substitution is occurring in communications media; in many cases, the previous need for real-time voice (or video) communications to facilitate transactions will be replaced by bursts of data or by text chats (aided by voice dictation on the device). There's a reason that a Microsoft executive was on the main stage with Marc Benioff, Salesforce.com CEO, at the recent Dreamforce event and that a Salesforce.com alliance executive was on the stage as a partner at the recent Avaya Engages event in Santa Clara, CA.

As has been said my many others, the only constant is change and that certainly seems to be true for the future Unified Communications - by whatever names it may be called. You have my best wishes for great success in this future.


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