Where Does your CEO Really Want to Spend Money?

Vik Verma, CEO, 8x8, Inc.
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Vik Verma, CEO, 8x8, Inc.

Today, the desktop phones are disappearing from corporate offices, including at the Weather Channel, Google, Yahoo and reportedly even at some universities. But that doesn’t mean that voice communications is disappearing. Instead, it’s just getting different, better and less costly.

The global telephony market is projected to generate worth of $136 billion in revenue by 2020—dominated by companies spending on proprietary infrastructure resulting in desktop phones that often sit idle—is ripe for disruption.

New technologies are growing in adoption and capability that lets companies replace on-site hardware with cloud services that integrate text and voice communications, screen sharing, document editing, video conferencing, contact center capabilities and also route calls to whatever device employees choose, be it smartphones, tablets or laptops. Now calls follow people and customers experience has become one seamless interaction.

The integration of all of this capability—broadly categorized under the unified communications banner—is being chased by dozens of companies, including giants like Google, Microsoft and Comcast, startups and cloud communications pioneers such as 8X8.

  ​Key to the growth will be the industry’s focus on maintaining enterprise-grade security, and the ability to educate CIOs and CEOs on the benefits of cloud communications 

Unified Communication as a Service, or UCaaS, is a delivery model in which collaboration and communication services and applications are delivered over the IP network. Gartner predicts the UCaaS market will be an $18 billion global business by 2019, up from $6 billion last year.

Looking even longer term, we see a $50 billion business communications market that is, so far, only 10 percent in the cloud. The forces that will drive the growth in cloud-based business communications will intensify to the point where, in just a few years, no one will buy on-premise office telephony equipment anymore. 

This might seem like a bold statement, but not when you look at what traditionally drives IT investment. Indeed, the same forces that drive the adoption of just about any new technology will drive this one. Three in four IT managers recently surveyed by Frost & Sullivan cited improved productivity, reduced costs and staying ahead of the curve as primary drivers for IT investment. All of those factors are in play with movement of business communications to the cloud. Let’s look at each one a little deeper. 

Cost 

A Wall Street Journal article reported that soft phone services—in which software that uses the Internet instead of a land line to make phone calls—run about $15 a month per employee vs. fixed-line phones that cost about $25 a month to operate. The fixed line costs can get even messier for companies with global workforces. In different offices, those companies may well have different systems and communications providers. If the systems were purchased at different times, they’ll wear out on different schedules. That creates an IT management headache and a system in frequent need of repair and maintenance. 

Functionality 

Many workers now spend more time out of their offices than in them. They’re on smartphones and tablets, and working in different time zones. They need an integrated, secure  communications platform with one-device access to telephony, instant messaging, mobile conferencing, video, etc. and one number to rule them all, anytime and anywhere. No  more remembering fax, cell and desk phone numbers. With cloud solutions, communications is more easily accessible and scalable. It can grow or shrink with users’ and  business needs. New features to the software, that add value to workforce communication capabilities, can be added incrementally and frequently. There’s no need to rip  up  wires or rollout more hardware. All that’s needed is an internet connection.

Analytics 

With communications tracked in a cloud environment, an unprecedented amount of data will be created. Using powerful analytics tools this will enable us to track customer service interactions and workforce productivity- making communications a strategic investment. No longer will all calls look the same, whether they’ve been answered or not. Companies can track, down to the minute, whether customer calls were answered or went to voice mail. Given integration with other software, such as existing CRM solutions like Salesforce.com, companies will also be able to track such things as how long their best sales people spend on calls, how long each call takes—or if sales folks are making calls at all.  

Familiarity 

The adoption of cloud communications started with consumers and voice over  internet, then moved to SMBs and is now expanding to mid-sized and global enterprises. Consumers were quick to grab onto savings and early adopters love new technology. SMBs don’t have the legacy investments that larger companies often do. As such, they’re more able to adopt newer technologies earlier. Going forward, Gartner predicts the highest growth rates for UCaaS will come from large businesses, followed by medium-sized businesses. They’ve spent years now getting comfortable with cloud-based CRM and ERP solutions. In large enterprises, one line of business often moves first and is a good test bed for others. With CRM and ERP already entrenched, communications is next. The time for enterprise communications is now, and what we call Enterprise Communications-as-a-Service (ECaaS) by medium-sized businesses. They’ve spent years now getting consumer-centric, 100 percent cloud and mobile-first, delivering continuous communications for distributed organizations. 

“In many ways 2015 was the year when cloud became mainstream,” says Synergy Research Group’s founder and Chief Analyst Jeremy Duke in a recent report. “Across a wide range of cloud applications and services we have seen that usage has now passed well beyond the early adopter phase and barriers to adoption continue to diminish.” 

Key to the growth will be the industry’s focus on maintaining enterprise-grade security, and the ability to educate CIOs and CEOs on the benefits of cloud communications.  

A recent survey by Osterman Research and Connect Solutions found that almost 48 percent of IT execs didn’t fully understand the impact a unified communications system would have on their business. Even so, 71 percent of them said there would be "significant" and even "enormous" benefits to be realized from the deployment of UC, the survey found. 

It won’t be hard for CEOs, one by one, to take the leap once they better understand how cloud communications will enhance business productivity in their companies. It is easy to calculate the cost benefits of moving to cloud communications rather than continuing with old, legacy systems. As CEOs look deeper into how the technology can improve workforce management, customer service, employee productivity—all while providing crystal clear communications—they won’t hesitate.