Enterprise Hosted PBX Systems in High DemandEnterprise Hosted PBX Systems in High Demand

Hosted PBX popularity has overtaken the global PBX industry. Already in 2019 new hosted PBX sales are on track to generate $5 billion for providers, accounting for 18% of all PBX sales, worldwide. Hybrid cloud, a fast-growing slice of all hosted PBX systems, could push that number higher.

Hosted PBX systems steadily grow at the expense of larger IP PBXs, forcing traditional premises PBX vendors to build up their cloud offers, where revenue opportunities are abundant.

The Eastern Management Group recently completed surveys of 15,000 IT managers in which we examined three significant hosted PBX issues: First, which vertical markets comprise the most enterprise hosted PBX customers; second, what UC applications are in highest demand by enterprise IT managers; and third, by how much of a premium are vendors pricing -- and IT managers paying for -- fully featured hosted PBX systems demanded by larger customers. Data presented here is from our latest report, “Worldwide Hosted PBX Market 2018-2024.”

These data points are essential to hosted PBX providers and customers. The vendors require this data to make decisions on applications to sell (e.g., presence) and customer willingness to pay for each feature. Enterprises need intelligence on productivity improvement applications that may be wise choices for their end users.

Key Vertical Markets

The Eastern Management Group studies hosted PBX usage in 22 vertical industries -- which is how we define the universe. Five industries that consume a lot of hosted PBX are education, insurance, healthcare, real estate, and retail. These vertical markets are far from the only ones using a lot of hosted PBX today. Nor are they alone in the number and quantity of UC applications consumed. Each of these industries is dense with branches, large numbers of professionals, and significant volumes of communications. Vendors may target these markets because monthly recurring revenue far exceeds that of the enterprise market as a whole.

A targeting factor for vendors is the ratio of communications-needy end users to employees. Whereas one industry may have a 1:6 ratio of hosted PBX seats to employees, others may have 3:6, or 5:6. Feature-rich systems in one vertical market can generate five to 10 times more revenue per employee than another.

Premium-Priced Features

Every vertical market has UC applications on which customers may rely to improve productivity; as such the features command a premium price. Here’s an example of three integrations we’ve seen in recruiting and staffing agencies: JobDiva, Jobscience, and PCRecruiter. Some hosted PBX vendors offer the three for $49/month.

UC features built-into the hosted PBX often cost more. Below is a chart of some UC features, and the percent of IT managers who think each is important to their business.

Many UC applications are worth a premium price because of the customer productivity improvement created. How much of a premium? Using Eastern Management Group’s pricing database, we determined enterprise systems sold with a package of UC features cost 230% more than similar size systems having a basic calling feature package. Eastern Management Group has also studied the productivity improvement associated with UC features, which we have determined to be substantial.

A Lesson for IT managers

The critical factor in deciding which hosted PBX system to purchase could come down to price, but that’s a false choice. Value has little to do with street price and everything to do with productivity. Find a vendor with a sales force that sells solutions; these companies provide consultative selling. They probably don’t charge more than a competitor for any feature, but they sell end-user value. For my money, the difference in seat price is well worth it.

For more information about the Eastern Management Group report, “Worldwide Hosted PBX Market 2018-2024,” or issues raised in this post, please ask our researchers or contact John Malone directly [email protected].