• September 20, 2011
  • By Leonard Klie, Editor, CRM magazine and SmartCustomerService.com

Enterprise Communications Is Moving to the Cloud

In the rapidly evolving business communications market, vendors of on-premises communications equipment now face strong competition as cloud services gain traction across the public, private, and hybrid cloud domains. In fact, by 2016, 41 percent of all enterprise communications users, or 386 million lines/seats, will be on virtual infrastructure, posing a serious danger to the on-premises communications equipment market, according to a new report from ABI Resarch.

"The cloud threat is real," says ABI senior analyst and report author Subha Rama, who notes that the current adoption for cloud-based communications equipment, which includes telephony, email and collaboration, audio, video, and Web conferencing, and unified communications, is at 25.7 percent. "By 2016, the [on-premises communications equipment] market will only grow 4.3 percent, while cloud communications will grow by over 21 percent, reaching $8 billion in revenue," Rama stated in the report.

The increased interest, Rama says, is being fueled by several factors. "Organizations are increasingly questioning the business case behind deploying proprietary, point solutions, given the growing demand for interoperability between different communications platforms for a seamless user experience across platforms, networks, services, and devices," he argues.

"While many of the on-premises solutions are point solutions and often stovepipe implementations, many are built on proprietary architectures and offer little native interoperability in a multivendor environment," Rama maintains.

Also driving adoption is a growing adoption of data center architectures and virtualization technologies and the need to integrate multiple applications to deliver the connected experience to users across different devices, including smartphones and media tablets, Rama says in the report, titled ">Enterprise Cloud Applications and Vertical Analysis."

Cloud solutions, whether they reside within an enterprise firewall in their own data centers or in multitenant, shared public clouds can yield several benefits, Rama argues. The most notable are IT consolidation and lower capital costs, but, "in more mature cloud environments, it also means federation of applications from a centralized environment across multiple endpoints and networks, leading to a richer and more productive user interaction with the infrastructure."

"Cloud adoption is a pronounced success in markets that have interoperable products, standardized protocols, and broad user adoption of these standards," he states. "Software-based communications solutions enable enterprises to leverage the benefits of server virtualization."

Rama also maintains that many of the current on-premises solutions are simply not cloud-ready and will see performance downgrades when virtualized.

The point offerings are frequently plagued with "proprietary hardware/software architectures and resultant interoperability challenges," but vendors continue to make them proprietary "to differentiate or achieve better performance and to lock-in customers as the cost of switching to a different architecture will be high," he continues.

Also in the report, Rama notes that enterprises are adopting a non-linear approach to cloud migration, maintaining some applications on premises while experimenting with others in the cloud. Mixed environments and hybridization are becoming the norm, he says, especially with larger enterprises. However, the technology to manage hybrid clouds and to enable seamless movement of applications across different vendor clouds is in its infancy.

According to Rama, standardization and interoperability are keys to accelerating the migration to the cloud. "All enterprise communications platforms should be virtualization-ready, which is not the case today. Even those platforms that vendors claim support virtualization can see significant performance degradation when implemented in virtualized environments," he says.

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