February 8, 2012

The Cost Advantages of Using a Hosted Unified Communications Service

  • A TCO Guide for SMBs
  • 8x8
  • Updated February 10, 2012

A challenge for small and mid-sized businesses (SMBs) is the cost of scaling their communications systems to rival the rich functionality and flexibility of bigger competitors with dedicated IT staffs. Upfront capital costs and the requirement for on-site staff to manage equipment and applications have fueled interest in hosted unified communications (UC) services, which allow smaller organizations to use a third-party provider's UC infrastructure in the cloud and enjoy the economies of scale of very large organizations.

This paper offers a full total cost of ownership (TCO) comparison between using a hosted UC service and buying/maintaining an on-site UC system for a 55-employee company distributed across three sites. The paper also offers a UC-in-a-box primer to put the landscape into context for those in SMBs new to unified communications.

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There's a lot being written about unified communications (UC) these days. You'll frequently see IP PBX/call server vendors comparing their own features and pricing with other on-premises equipment vendors, for example, as well as direct feature/cost comparisons of hosted UC services. This paper is engaging because it contrasts the TCO and management complexity of the two different options: buying and maintaining on-site equipment versus using a cloud service. The paper presents a sample configuration and compares the service costs of one hosted UC provider (the sponsor, 8x8) and that of one aggressively priced IP PBX vendor (ShoreTel). Savings calculations would differ depending on who's being compared, the features desired and the size of your installation, of course, but this paper gives you some helpful ballpark numbers with which to start your TCO evaluation.

In the ShoreTel comparison I don't know why they would have 55 lines @ $45 if there are only 55 phones. Having one to one ratio makes no sense.

The calculations in the original form of the paper actually reflected a prorated cost-per-phone for the WAN connection. So there was not one traditional line per phone.

The original version of the paper did not make this clear, unfortunately, and we appreciated your pointing this out.

The paper has been updated to reflect these changes.

The equipment specified for the Shoretel comparison is vastly over built in comparison to the SMB requirements.
- Site 1 with 25 users: One ShoreTel Voice Switch T1K and one ShoreTel SG-30
- Site 2 with 25 users: Two ShoreTel SG-120s and one SG-30
- Site 3 with 5 users: One ShoreTel SG-90 (support for 4 analog trunks and additional 50 phones)
- One ShoreTel Distributed Voice Server located at one site for backup telephony features and applications
- 55 ShoreTel IP Phone 265s

For example, why would you specify 2xSG120 and 1 SG30 at site 2? This configuration provides redundancy for nearly 4x the number of required users. The only reason I can see for this is to drastically inflate the costs for the Shoretel gear and make the cost-disparity seem much greater. A more realistic comparison would see sites 1 and 2 with roughly equivalent HW (T1 notwithstanding).

I want to see a more realistic apples to apples comparison. Right now it is apples to Buicks.

Disclosure: I work for a reseller that sells enterprise and SMB systems that include (but not limited to) Shoretel.

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