UC On-Prem Is Still A Viable Option

2 May 2019

As an industry, we are inundated with advice pointing in the direction of network-based UC as a Service (UCaaS). The drive to adopt the “as a service” model is fueled by the wide variety of UCaaS offerings available along with the desire of businesses to outsource necessary, but non-core, business services. The ability for organizations to move key attributes of their voice and UC services to the cloud has certainly reshaped the UC&C industry, but that doesn’t mean that businesses are 100% behind this move.

Over its life, the enterprise communications business has pendulumed back and forth between premises-based and cloud-based solutions based on a variety of factors including cost, technology, marketing and business objectives. While the first three of those are shaped primarily by the communications business, the last, and ultimately the “deciding,” factor rests with the business itself.

The communications needs of businesses in the early 20th century drove the initial development of “private branch exchanges” or customer-controlled (literally, because we were talking about cord boards) branches of the central office “exchange.” The 1960s saw the introduction of Centrex, the mother of all cloud voice services, and premises-based and network-based solutions coexisted side-by-side.

The 1970s and 80s brought customer premises Centrex, essentially a managed service where the local telephone company installed and operated a central office on the customer’s premises. We eventually got ISDN Centrex and Nortel P-Phones for the DMS-100 that provided the same call handling features as ISDN (Hold button, multiple line appearances and one-button feature access), but delivered using analog technology that turned out to be way cheaper than the ISDN approach.

In each case, the market “figured out” what would be the best approach for each set of circumstances. Large installations typically went for Centrex, and while that usually limited the choice of station equipment to “What color 2500-set do you want?,” businesses gleefully installed hundreds of 1A2, and later Comkey, key systems (KTS) “behind” their Centrex.

More than anything else, the cost and utter silliness of the Centrex-KTS combo drove everyone to premises based solutions that could natively support business sets (i.e. Hold button, multiple line appearances, one-button feature access) plus a hundred other things.

The advent of voice over IP (VoIP) systems and virtually ubiquitous LAN coverage in businesses has now brought us to the next decision point, and with it, the idea that “cloud” is now the only way to go. Big decisions points create confusion and our knee-jerk desire for simplicity brings the hope of one unifying answer – unfortunately, that’s not how markets work.

As the idea of UCaaS has come into clearer focus, the realization has settled in that cloud may not be the best solution in all cases. The growing recognition of “hybrid” cloud/on-premises solutions might be the best choice for many installations is a testament to that. The argument goes that large central sites can be more cost-effectively serviced by on-premises solutions while small remote sites, lacking on-site dedicated technical support, would likely benefit from a cloud-based service. That is particularly true if the central site voice requirements are “basic” and the company has come up with a way to get them dirt cheap.

Of course, that doesn’t mean that all small sites, either branches of large firms or traditional small and mid-size customers, will think the cloud is the best choice for them. For small and mid-size businesses, telephones are only one of a hundred important things they have to decide on, though there is universal recognition that “Talking to customers and others on the phone” is a business imperative.

For a small business owner, the simple decision logic may be, “Phones are very important, I’ve got an on-prem solution now, it works, but they’re telling me that using a remote computer service is a better way to do this.” If that business owner has other problems to deal with, they’ll buy another on-prem system and go on to their bigger problems. That decision will be even easier to make if there is an option that packages all of the required components including gateways and session border controllers in the package.

Ironically, that same type of logic can drive decisions in big businesses as well. We have all dealt with organizations that are loath to be on the “bleeding edge.” Their managers will tell you flat out, “We don’t make a habit of jumping on bandwagons.” If you’re dealing with one of those buyers, you can talk about secure, geographically dispersed, fully redundant data centers until you’re blue in the face, but the only thing that's going to give them that all-important sense of security is seeing that PBX humming away in the data center with its back-up power and redundant network connections, all under their direct control.

For dealers, what this means is that it’s still important to listen to customer concerns. While your overall business model might be driven on a migration from “pushing iron” to offering cloud-based services with recurring revenues, this is not a one-size (or “one-plan”) fits all kind of business.

Of course, if the dealer is committed to driving as quickly as possible to an all-services business model, it might be logical (if “painful”) to walk away from that opportunity. Like in baseball, however, only so many opportunities come along in any game. If that customer wants an on-prem solution, that’s a customer you keep and one that might be ready for the cloud on the next refresh.

The sweetest win, however, is finding the prospect who’s been pitched cloud-solutions from fifteen different directions, but you’re the one who figures out that his real hot button is the direct control that only a prem-based solution can deliver. That’s a commission check you’ll really enjoy cashing.

Sangoma is a leading-edge provider of the full range of UC&C capabilities and products based on the open source Asterisk platform. The company has packaged that capability and offers a full-function hosted UCaaS offering, but continues to offer fully configured premises-based systems for customers who prefer them.

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