October 14, 2013

The Unified Communications Implementation Decision: On Premises, Cloud or Hybrid?


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The enterprise can approach implementing Unified Communications (UC) three ways: as an on-premises solution, by subscribing to a cloud service, or using hybrid approach that combines the on-premises with the cloud solution. Any of these three solutions is valid, and the ultimate choice will  depend on the financial resources, staffing, risk, and security considerations of the enterprise.

The organization's business model will have primary influence on the selected solution of UC. Among the business considerations: 
  • Does the organization have the financial strength to use capital (CAPEX) funds-- whether from business profits or the ability to borrow the capital to finance a solution? If the capital is not available, does the enterprise favor expensing the costs of IT implementation through outside services? 
  • Is the enterprise ready to trust an outside service for UC?
  • Does the IT staff have the training, knowledge, and experience to implement an on premises system? If not, does the enterprise want to retain a VAR to implement and possibly manage an on premises system?
  • Are the IT and telecommunications departments separate or combined? Since any solution will be IP based, who is in charge can affect the decision. For example, IT may want an on premises system while telecom may favor a cloud solution--  especially if the enterprise has been a CENTREX customer.
  • Can the premises based solution be remotely managed or does it need to have local vendor support. If neither is possible, then a services solution may be more attractive.
  • Does the enterprise consider that the move to UC has a higher success risk when implemented by the internal IT department vs. depending on a UC cloud service?
  • Does the enterprise have regulatory and/or compliance requirements that make it difficult to use a UC cloud service?
  • What are the enterprise's competitors doing when they implement UC? What is common in the enterprise's vertical market?

Making the UC Implementation Decision

Once the business process framework is established, deciding on the ideal UC solution also depends on security, staffing, and economics. Organizations also need to consider the best method to introduce  UC features to their end-user community.

There are three available solutions for the enterprise when supporting Unified Communications. 
  • An enterprise can implement a complete system and locate it at their data center(s) as a CAPEX solution. 
  • The enterprise could use a cloud service as an OPEX solution. 
  • The enterprise can balance the first two solutions into a hybrid implementation gaining the advantages of both while limiting their CAPEX.

These three solutions need to be evaluated for their Return on Investment (ROI) and the Total Cost of Ownership (TCO). A favorable ROI does not necessarily translate into a favorable TCO. Some analyses have demonstrated that when compared, an on premises system will have a lower TCO if the system is kept more than three to four years. So the life of the solution will also affect the cost of supplying UC and the ultimate solution selection.

The On Premises Solution

Implementing an on-premises solution provides high levels of security and control. The implementation and operational risks can also be lower with the on-premises system. The risks with a cloud service provider include service availability/reliability, since the cloud provider might not include the Internet access to their UC service as part of a Service Level Agreement (SLA).

The financial stability of cloud startups can be questionable because many are operating on venture capital, not profits. Some of the startup communications providers use another vendor's software to implement their UC services;consequently,  the provider is not the developer and the experience level of the staff with the software may be minimal. Further, the provider has to wait for improvements and fixes from the original software vendor, which may result in a much slower turnaround for software changes.

The initial cost components of buying a UC system are the software licenses. Once the first year has passed, the primary costs are software subscription, maintenance, and data center facilities. These second year onward annual costs can be far less  than subscribing to a cloud services after the first year of operation.
The UC Cloud Service Choice

IT and communications budget restraints can make an on-premises UC solution too capital intensive, and any enterprises prefer not to have any new capital costs. A cloud solution that is expensed with little or no capital expenditure may be desired, especially whenthe monthly costs are fixed based on the number of users and the features used. 

Some providers offer cloud-based UC services by feature group (such as video conferencing for a specific department),  allowing greater flexibility when determining what UC features should be offered to individual users. Most enterprises start by implementing  a sub-set of avaianble UC features, observing the features' benefits and their ROI.

While the cloud service approach requires less IT staff, it does still require staff to manage the cloud service provider 's performance and billing. 

The Hybrid Approach

The hybrid solution allows the enterprise to maximize those features that are mandatory for the entire organization, while using cloud based features only for those in the organization who need them. The enterprise can always move functions from the cloud to a premises-based system as the cloud costs exceed the cost of on-site implementation. 

The hybrid approach can also deliver business continuity failover services at a much lower cost. The enterprise does not have to have an on premises backup system, the cloud does it.

Solution Comparison and Conclusions

The on-premises solution may offer  better security . The cloud service solution can be cheaper, and require less staff time but will require greater Internet bandwidth and have greater security issues. Both solutions are equal when considering the phones and on-site LAN operation.

The financial, technical, facility, and staff support can force the implementation decision in a particular direction. The balance of all the decision factors and how to weight their values is up to the enterprise.

Unified Communications is all about multi-media communications and collaboration. UC is the key to staying competitive and agile in a global economy no matter what size the business. There is no single right or wrong approach to implementing UC for any particular organization size or market. 



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