Sunday, 1 November 2009

Cloud Based Communication Services

Hi Folks!
I've been doing a lot of thinking and speaking to people about what it will take to win, or rather, become a market leader in the cloud based communications market? Which enterprise unified communication vendors and service providers have made the market investments and moves towards delivering communications capabilities as a service? Which providers will be the winners? How will the business of the unified communication vendors change? In a series of articles I'm going to share my view and opinions on what’s happing in this space.

Even if it’s still early in its evolution, sourcing communication capabilities as a service as opposed to buying, integrating and managing premised based equipment is more viable than ever. It’s primarily the current economic climate and focus on cost control that has escalated the rate of adoption of cloud based communication solutions. The increased demands for OPEX based solutions certainly help generating a lot of interest. In addition, while the use of sophisticated communications and collaboration capabilities is often a strategic part of conducting business, it’s rarely a core competency. Result: vendors and service providers of varying types and sizes are hurrying to take advantage of this evolving market.

A historic inhibitor to adoption and growth of cloud based voice and unified communication services are that sceptics and “nay-sayers” have been making lots of noise. Concerns for data security, integrity and privacy have been the most common arguments. All I have to say here is; Come on, look at They have convinced hundreds of large global corporations to buy into their CRM solution, delivered as a service. What can be more sensitive than trusting a 3’rd party to control and manage all kinds of data records and correspondence with customers and partners? Yet, has been very successful and today sports a market cap of more than $7b. I think we have crossed the chasm and corporate customers will now seriously consider cloud based unified communication services.

Even with some customer concerns lingering, as I see it, the biggest inhibitor to growth lies inheritably with the vendors and service providers themselves. In order to execute on the cloud opportunity, vendors and service providers will need to augment their business models and channel strategies. The fact is, the notion of cloud computing represent an open and democratic (so far…) infrastructure to build upon, or a clean canvas on which vendors and providers can paint their technology vision. Thus, the cloud has opened the floodgates for service innovation and market disruption. This disruption will quickly force vendors and service providers to seek new ways for aggregating, selling and delivering communications services.

Lemon-Operations, a services company focused on recruiting, developing and managing indirect sales channels for IT and communications vendors across Europe and United States, is doing a lot of work for vendors who want to win in the cloud. I think Lemon-Operations metaphor for what’s happing in the cloud space is quite astute: While service innovation is shaping the IT revolution below the Cloud, vendor Galaxies will fight it out above the Cloud.

The key to success will be for the vendor to establish themselves as a center-of-gravity, or a Galaxy, to which other technology partners and resellers are attracted. To continue with the metaphor, the intensity of a vendor galaxy’s gravity will depend on to which extent other technology partners, resellers and influencers can grow and prosper within that galaxy. As such, the vendors need to get on-top in the value chain by developing compelling value propositions that attract many other types of businesses and partners. Further more; this will require new partnerships and contractual arrangements with infrastructure partners, technology partners, resellers and influencers. Put simply, establishing market leadership in cloud based communications market will require an augmented business mode, a much different eco-system and much more diverse indirect sales channel.

What do you think? Which vendors and service providers are in a position to establish the greatest and most influential Galaxy?


  1. Hi Roland

    A good article, and some fuel for thought.

    History suggests that incumbent suppliers typically are the last to adopt disruptive technology in order to protect their revenues and because they move slowly.

    If that creates a vacuum, the question is whether the leaders will come from an existing cloud based company like salesforce, or from the various open source initiatives, or a corporation with major clout but no large UC revenues like Google, or perhaps from the social / business networking marketplace.

    Many of the functions needed are already in the cloud - sip trunking, minutes termination, number portability, soft pbx.

    Anyone looking at building UCS into their own network needs to look at how they will interact with customers, suppliers, & partners.

    Brian Merritt
    VP Sales Solutions & Operations [LION] at Interoute

  2. To become a market leader in any industry it is vital to focus on the customer. The driving forces for business customers to move towards a fully Hosted Unified Communications (HUC) solution are:

     Total cost of ownership
     Low upfront capital expense
     Small risk of obsolescence
     Single vendor accountability backed by Service Level Agreement (SLA)
     Buy services a la cart and add services to make expansion easy
     Fast, successful deployments with no impact on business continuity
     Tighter vendor relationship

    A provider who can deliver a complete HUC service with these driving forces in mind has a greater chance of success.

    Dean Manzoori
    SVP - Service Delivery & Technical Operations at Broadcore