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Once again, the cloud comes to the rescue.
Of course, cloud or hosted UC is nothing new either.
The concept of cloud communications and the basis of
UC-as-a-service (UCaaS) go back at least 15 years. But
it’s only more recently that UCaaS has hit performance
and feature levels rivalling on-premises solutions. And
many pundits and proponents believe the cloud is ready
to push a powerful second wave of UC adoption.
“Private and public cloud-based UC-as-a-service solu-
tions are expected to fuel the next phase of growth,” says
BCC Research analyst Nandita Bhotika. “The cost efficien-
cies and operational flexibility of these shared services
are proving a potent model for market players. Although
challenges in its adoption are still a concern, UCaaS is
expected to give the UC&C market its needed boost.”
BCC researchers expect the market for UCaaS to
total nearly $18 billion by 2020, up from $6.5 billion in
2015 and reflecting a five-year CAGR of 22.5 percent.
Much of the growth, say BCC, will be driven by wider
adoption among SMBs, which tend to find cloud-based
services more accessible due to smaller capital outlays.
UC&C Market Size and Expectations
Service Type
2015
2020
CAGR
Global UC&C market total
$26.5 billion $62 billion
18.5%
On-premises deployments $18.2 billion $37.8 billion 15.7%
Hybrid deployment
$1.8 billion
$6.2 billion 28%
UCaaS
$6.5 billion
$18 billion
22.5%
Source: BCC Research
According to Diane Myers, senior research director at
IHS, Inc., hosted UC seats, which made up 22 percent of
the unified communications market in 2014, will jump to 46
percent of the market by 2019. Myers says hosted PBX and
UC services are being pitched alongside SIP trunking as more
multi-site businesses seek out hybrid solutions. Markets and
Markets, meanwhile, makes an even more ambitious fore-
cast, putting the UCaaS market at $24.88 billion by 2020.
Here again, the research firm attributes much of this growth
to SMB adoption as these buyers look to update and simplify
communication processes at an affordable cost.
In a bit of a twist, the optimism around future cloud
UC adoption has a lot to do with the reasons why busi-
nesses have not adopted UC up to this point. And, not
surprisingly, the top barrier to UC adoption, at least ac-
cording to UBM Tech’s findings, has to do with perceived
costs and subsequently getting an ROI on those expens-
es, both of which were named by about three-quarters of
respondents. For more than two-thirds of non-adopters,
UC implementations are perceived as posing a risk of
disruption to the business, while 62 percent cited a lack
of in-house technical expertise.
“The cloud may well provide one possible answer,”
say UBM Tech analysts.
Indeed, more than half (54 percent) of respondents
who don’t yet have UC in production believe cloud can
help overcome their top obstacle to implementation:
cost, while about the same percentage (53 percent) see
the cloud as offering more flexible scalability – a key
concern for incremental UC rollouts, say UBM analysts.
In addition to addressing objections about upfront
capital investment, the as-a-service model also is known
to alleviate issues with internal IT skills shortages,
while allowing firms to bypass technical implementa-
tion issues and, in turn, start delivering results to the
business sooner. A cloud-based deployment also can
facilitate the kind of smaller-scale pilot that can provide
the proof-of-value executives need to green-light broader
enterprise adoption, UBM Tech researchers point out.
“These advantages, combined with ongoing ad-
vancement in cloud technology and market acceptance
of the cloud model, are making it more likely that future
adopters will opt for some type of UC-as-a-service offer-
ing,” says the UBM Tech study.
Among respondents who made their decisions to
implement UC a year or more ago, for instance, only 35
percent even considered the cloud, and just 19
percent wound up going with a cloud-based solution. Of
respondents who are still contemplating their UC imple-
mentations, on the other hand, more than half say they
are now likely to consider cloud. “In fact, 15 percent
have already made up their minds that if and when they
Source: IHS, Inc.
Hosted UC seats made up 22% of the unified communication
services market in 2014, growing to 46% in 2019
70%
2014
2019
35%
0%
Source: UBM Tech, XO
Next Wave of UC
Don’t know
Little or no
difficulty
Moderate difficulty
Significant difficulty
Al ost derailed
the project
Which of the following do you per eive as advantages
of cloud-enabled UC?
Hosted UC
Hosted PBX
Global Seats (Millions)
Reduction of major capital costs
More flexible scalability
Avoidance of ongoing operational management burdens
Faster time-to-befefit
Greater reliability or resiliency
54%
53%
47%
44%
35%
Source: UBM Tech, XO
How much difficulty did each of the
following present during your organization’s
UC implementation?
Choosing on-premises or cloud
Choosing UC vendor(s)
Solutions did not work as promised
Cost or time overruns
End-user adoption
Funtional problems during pilot
Technical complexity
19%
17%
45%
23% 13% 2%
18%
40%
26%
14% 2%
20%
36%
29% 11% 4%
14%
32%
37%
14% 3%
16%
29%
44%
9% 2%
13% 23%
44%
16% 4%
45%
27% 7% 2%
Source: IHS, Inc.
Hosted UC seats made up 22% of the unified communication
services market in 2014, growing to 46% in 2019
70%
2014
2019
35%
0%
Source: UBM Tech, XO
Next Wave of UC
Which of the following do you perceive as advantages
of cloud-enabled UC?
Microsoft
Adobe
SAP
Other Top
Ten
0%
5% 10% 15% 20% 25%
Source: Syngergy Research Group
Worldwide Market Share - 2015
ADP, Google, IBM, Intuit, Oracle, Workday
Annual Growth
70%
Adobe
55%
SAP
73%
Other top Ten
29%
Hosted UC
Hosted PBX
Global Seats (Millions)
Reduction of major capital costs
More flexible scalability
Avoidance of ongoing operational management burdens
Faster time-to-befefit
Greater reliability or resiliency
54%
53%
47%
44%
35%
How m ch difficulty did each of the
following present during your organization’s
UC implementation?
Choosing on-premises or cloud
Choosing UC vendor(s)
Solutions did not work as promised
Cost or time overruns
End-user adoption
19%
17%
45%
23% 13% 2%
18%
40%
26%
14% 2%
20%
36%
29% 11% 4%
14%
32%
37%
14% 3%
45%
27% 7% 2%
32
Channel
Vision
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May - June 2016