MARKET STRATEGY: A unified approach

21 November 2014 |

Enterprises all over the world are migrating from on-premises to cloud-based unified communications. What role can providers play in this market?

2014 has seen a flurry of announcements from carriers in the unified communications (UC) space. Major names such as NTT Communications, AT&T, Tata Communications and Telstra Global have all made significant launches or expansions to existing UC services in recent months, and why wouldn’t they?

The global UC market is expected to grow at a CAGR of over 15% between 2012 and 2016, according to TechNavio. It has already proven a lucrative market for the vendor community, traditionally dominated by the likes of Cisco, IBM, Avaya, Siemens and Alcatel-Lucent.

The migration to cloud-based solutions has brought with it a major disruptive force in the market, however, in the form of Microsoft’s Lync UC platform. Cisco still retains its dominance in the networking equipment side of the market, but has seen its position weaken on the software side, where Microsoft is stealing a lead on instant messaging (IM) and presence. This is expected to only increase as the organisation comes good on its plan to integrate Skype with Lync.

In its “Magic Quadrant for Unified Communications as a Service (UCaaS)” report for 2014, analyst firm Gartner profiled 21 of the most influential players in this space, which included four carriers; Orange Business, AT&T, Verizon, and Telefónica.

Many of these offer both Microsoft’s Lync UC solutions and Cisco’s Hosted Collaboration Solution (HCS). They also rely on their strong brand name, global networks, security solutions and data centres to support their offering and gain market share.

2014 has seen a number of new carrier players enter the market. Among these is Telstra Global, which launched its global cloud-based UC services in August. The solution, which first launched in Australia last year in partnership with Cisco, is now available on four continents across 25 countries, and will be delivered across the carrier’s network to over 2,000 PoPs.

According to Telstra Global’s director for marketing, products and pricing – international, Jim Clarke, demand was ripe in the market to take its UC solution global.

“We saw a trend for enterprises moving away from the traditional PBX on-premise approach to a more hosted cloud solution set. There was a very consistent message from enterprises that they wanted to reduce cost of ownership. One way to do that is to migrate their collaborative services to the cloud, reducing the hardware expense upfront,” he says.

The strength of cloud
As enterprises expand their operations, setting up offices in new countries, cloud-based UC is becoming an increasingly strong fit.

Another trend Clarke noted from the operator’s experience in its domestic Australian market was the need for enterprise customers to reduce the amount of vendors they worked with.

“So rather than having to find a vendor for the kit, another for telecoms or another for upgrades, they would come to a one-stop shop and have one provider manage the lot,” he says.

Telstra offers its customers Cisco’s HGS through its global network, which brings together a whole host of voice, video, instant messaging, presence and web conferencing services.

This builds on a deep and longstanding partnership between carrier and vendor, with Telstra most notably becoming the first operator to launch Cisco Intercloud in Asia. Intercloud forms part of a billion-dollar investment by Cisco to create an interconnected cloud platform. Telstra were one of the first to sign up and subsequently launched an initial trial version to a few partners and customers in Australia, before extending it in to Hong Kong and Singapore. “It shows the depth of our relationship,” says Clarke.

Telstra Global also claims to be the only operator offering Cisco’s HGS on four continents, which Clarke says offers the company a competitive advantage in the market.

He is no under illusion, however, that having a strong cloud offering is heavily linked to success in the UC segment: “We have to increase our cloud nodes above what we have already,” he says. “I do believe that operators that have their own cloud platforms and that will continue to grow their cloud capabilities will be the most successful,” he says.

This bodes well for NTT Communications. The operator has embarked on a period of major investment, expanding both its cloud and conferencing capabilities, through the respective acquisitions of Virtela and Arkadin. It integrates VoIP phones, web and audio conferencing, instant messaging and other collaboration tools in the cloud.

In February it launched its cloud-based enterprise communications service, Arcstar UCaaS, in the US and Europe, expanding on its initial offering in Japan. Offered out of NTT Com’s Universal One network, it again utilises Cisco’s HCS, but also offers value-added services such as audio, web and video conferencing solutions it inherited from the Arkadin acquisition last year.

“There have been some strategic acquisitions in this space, particularly with Arkadin which has brought us a lot of expertise,” suggests Alex Moore, director of technology and engineering at NTT Europe. “The Virtela acquisition also helped us expand our coverage of the globe.”

In Europe, NTT is initially focussed on the UK, France and Germany, and Moore believes there is huge demand for large MNOs to expand their reach out of Europe into the US and Asia.

He also shares the view that the maturity of cloud services has played a major role in the growth of the UCaaS market. “The market is more stable and reliable in terms of what service providers are able to offer,” he says.

Arcstar UCaaS is available through an administrative portal, which Moore claims has been developed specifically for administrators in mind. “Enterprise customers are looking to outsource their unified communications solutions to partners like ourselves. We need to provide them with an intuitive interface,” he says. “One of the key aspects is it is very intuitive to make changes.”

The next-generation of UC services
Providing a flexible service offering that is able to meet the different requirements of end customers is a must in the UC market. This means carriers must ensure there UC service portfolio is constantly evolving and growing to tap into new business trends.

Only a handful of months after its global launch, Telstra Global is already preparing to expand on its existing UC capabilities. Clarke says the operator will be adding further mobility and call centre capabilities to its portfolio over the next 12-18 months. He also has identified enterprise-tailored social networking services as a major growth opportunity.

Clarke has witnessed first-hand at Telstra the significant benefits of utilising tools such as Yammer, a private social network tool that was acquired by Microsoft in 2012 and is used by more than 200,000 companies worldwide. Telstra is a “super-user” of Yammer, with 40,000 active users as of June 2014, which it utilises for internal communication.

Gartner has also identified that both smartphones and tablets are playing an increasingly prominent role in the UCaaS ecosystem. UC offerings in the future could therefore evolve to incorporate more location-based services and contextual information on mobile devices to support the growth of enterprises customers on the go.

Expect to see further announcements from carriers launching or expanding existing EC offerings during the remainder of 2014, leading into 2015.

“My expectation is that other carriers which have not already launched these types of services will do so, and those that already have offerings on the market will continue to augment and grow,” says Telstra’s Clarke.

“My view is that you have to differentiate yourself with the types of solutions and applications that you can offer. Just offering a collaborative service by itself will not be enough. Operators will need to take heed of customer requirements and react accordingly.”