Enterprises still face UC learning curve

Unified communciations offer the promise of uniting real-time and non-real-time communications, according to industry experts, but VARs are struggling to find ways to quantify the return on investment.

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With Irwin Lazar, principal analyst and program director, Nemertes Research.

Question: Where is the industry in unified communications?

Lazar: We asked companies where they are in unified communications from October to January. Typically what we heard is that it is a year or two years away. Most of the enterprises we talked to are focused on VoIP.

Question: How do they perceive UC?

Lazar: They tend to see UC as unified messaging. We talked to enterprises about UC, and they said the strategy was to buy voice mail and integrate it with VoIP. I think enterprise don't really understand what UC is and what the value proposition is.

Question: Is it that it's such a complex area, or that the names unified communications and unified messaging — a part of UC — overlap and cause confusion?

Lazar: I think that the names are similar and that there is some overlap. The biggest challenge to the enterprise market is organizational. Most enterprises have a VoIP group, and in the networking domain all they look at is voice. When you ask them what they are doing about integrating voice with IM and presence, they do not have a good answer. It is outside the scope of their responsibilities. Only 8% had any sort of unified communications planning functions in which they put teams together to develop common strategies around UC. The vast majority of companies still approach things in silos in which groups have responsibilities for different components of UC, but had no common strategy.

Question: How are the vendors coping with this difficult landscape?

Lazar: It's been a challenge for vendors. They can't identify a buyer. The phone system groups have no knowledge or expertise in UC. When the decision is made to invest in VoIP, it's easy to identify where money is saved. With UC, it's pretty hard to develop cost models. Companies say, "All this stuff is great, but how do you quantify it?" Only 30% of enterprises even are trying to come up with a quantitative model around UC.

Question: So how should vendors market UC?

Lazar: Demand for UC comes from end users. If vendors can convince the business units that they can close a higher percentage of sales, have better customer retention (and achieve other tangible advantages), (the business units will) turn around to IT and say, "We need this." The idea is creating pull-based demand instead of going to the IT department. Most IT departments, unless asked to do it or unless there is a clear cost savings, are not going to deploy it.

Question: Do vendors get this?

Lazar: I think they do. If you look at marketing around UC, it is very different than VoIP, (which focuses on saving money). Cisco's UC marketing is about the human network, Microsoft's is similar. For all of them, the idea is to communicate without barriers. You don't hear as much mention of technology. You hear more about the goals or concepts. Cisco is not going to go in the door with a list of features. They will walk in and say, "Here are business processes we can improve with this."

Question: This sounds like quite a change. Are enterprises buying into it?

Lazar: Eight percent of enterprises have a dedicated communication and collaboration function. Of the remaining companies, another 35% have some form of communication between departments, such as between messaging, IM and voice. 57% are still in silos. Those would struggle the most to take advantage of UC.

It's a matter of creating demand in the business unit or at CIO level. We've developed a model for clients, called "Just-in-Time Fetch the Expert." You're a financial institute, a customer calls for advice. The person is on the phone and starts asking about other products. You would (use the system) to see if there is a product specialist available and drag them in. If it improves the efficiency of the process and increases the likelihood of a sale in 5 to 10% of cases, that's a compelling model when you talk to the enterprise. The last thing they want to do when (a customer shows interest) is to take a message or have them get lost in a queue.

Question: Are you satisfied about where the industry is in the adoption curve for UC?

Lazar: I think we're fine as far as where we are in terms of marketing. It's a pretty new space and we are at the high end of the hype cycle. It will back off and companies actually will figure out how to implement this. There is common agreement on what UC is and what the benefits are. That's a good sign. If you talk to Cisco, Avaya, Microsoft (and others), you hear much the same story. Enterprises spent the last year making decision around VoIP and will spend the next year with mass implementations. They don't want to be bothered with anything else at this time. Now is the time to get support and management issues nailed down. We will not see large scale deployments (of UC) for one to two years from this point.

This Executive Briefing originally appeared in a weekly report from IT Business Edge.
This was first published in June 2007

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