Taking the Pulse of the UC Market: Deployment Practices, Winners and Losers, and Services RequirementsTaking the Pulse of the UC Market: Deployment Practices, Winners and Losers, and Services Requirements

Checking the pulse of the unified communications (UC) market allows us to more accurately predict which products end users will buy, as well as to anticipate which vendors will succeed and which will likely experience disappointment. It also allows us to understand trends in deploying unified communications from a strategy and ROI perspective, and to evaluate ideas regarding which services may be needed by end user companies.

To this end, Wainhouse Research launched an online survey in June 2008 targeted toward people who download our weekly newsletter and to members of the NoJitter.com audience. We received 113 verified end user responses, 43% of which were from companies with more than 10,000 employees, and an additional 31% from companies with between 1,000 and 10,000 employees. Thus, the majority of the results are from what may be considered “large enterprise”. The balance consisted of SMB respondents.

This article explores some of our findings from this survey and hypothesizes about their implications. We begin by looking at the process of deploying unified communications and attitudes toward how it is deployed. We then discuss UC mindshare--who has it and who does not. We see how this mindshare is reflected in actual or anticipated purchasing decisions around presence engines and UC clients. We conclude by revealing the kinds of services end user companies will pay for, and those they won’t.

WHY HAVE A UC STRATEGY WHEN ALL I WANT IS THE TECHNOLOGY?

We believe companies that weave unified communication into the fabric of their organization will derive the biggest benefit from their UC investment. This requires companies to plan ahead and to develop a concrete strategy on how UC will benefit them. We wanted to find out if organizations were developing strategies for UC, and if executives were involved in the purchasing process. Specifically, we asked respondents if they had performed some of the typical activities one would expect to see in a technology adoption process including a needs assessment, formulation of a strategy, a return on investment (ROI) analysis, the issuing of requests for information (RFI), vendor selection, pilot programs, and deployment beyond pilot stage. Figure 1 shows some surprising results.

Figure 1: Unified communications process steps completed among respondent companies.

One of the stunning results that jump out of this chart is that while only 15% of the companies have done a needs assessment and only 8% have a formal UC strategy, 20% of respondents have already selected vendors and another 26% have vendor selection underway. In addition, 22% have already done a pilot.

Another interesting result is that very few companies have performed any kind of ROI analysis, and few RFPs been issued. For those that have moved forward with UC in this fashion, it appears to be done in a sort of "Ready-Fire-Aim" fashion.

These results indicate that UC is being implemented without a strategy and without a financial justification in a significant number of companies. Clearly, many companies anticipate gaining value from UC based on the promises found in the marketing messages by the leading vendors, and/or they just believe UC is the “next wave”--and thus implementation is inevitable. We believe this is a poor way to deploy enterprise technology, and we are beginning to hear rumblings from some companies that have rolled out UC in this way, suggesting that they have encountered significant deployment and/or adoption challenges.

We asked users what their biggest problems were in deploying unified communications. As Figure 2 shows, funding and priority ranked as the most difficult areas; these are closely linked in many companies, and they are also correlated with lack of a UC strategy. Wainhouse Research believes that without a UC strategy, and the ROI analysis to back it up, there is no reason why UC should be a priority and have funding.

Figure 2 Problems companies face in deploying UC (end users only).

IS UC STRATEGIC OR JUST TACTICAL?

Figure 3 shows that the percentage of IT departments making UC decision continues to increase year over year. Our 2008 survey showed 66% of the IT departments making this decision, compared with 52% in 2007. This is a 14% increase toward the IT department, and most of this change is from CXOs removing themselves from making the purchasing decision (only 16% in 2008 for CXOs versus 24% in 2007). Thus, it may be that decision makers are beginning to view unified communications as tactical rather than strategic. Clearly, vendors who are well placed in the data center and on the desktop, like Microsoft, Cisco, and IBM are well situated to take advantage of the current market interest in UC.

Figure 3 Comparing UC purchasing decision maker 2007 versus 2008 (end users only).

WHO BENEFITS FROM UC

We asked end users who in their organizations will get the most bang for the buck invested in unified communications. Not surprisingly, executive management is expected to benefit the most. However, as Figure 4 shows, after executive management, those expected to see the most benefit are organizations internal to the company including operations, project teams, and administration. The outward, customer facing functions including customer service, marketing, and sales were surprisingly low on the UC totem pole when it came to expected benefit. We constantly hear marketing pitches around sales persons needing UC to reach someone rapidly to help close a deal. Maybe marketing messages and examples geared more toward the inward-facing functions of the company will resonate more with those responsible for making decisions about unified communications.

Figure 4: Respondent estimates on those who benefit most from unified communications.

Another explanation for the results in this graph may be that it reflects the fact that IT is making the decisions about UC, and IT typically provides services to internally facing constituencies.
HOW BROADLY WILL UC BE DEPLOYED?

We asked companies if they will roll out UC to everyone in the organization, or if they would somehow be selective in who gets it. The possible responses were

* All capabilities to everyone,
* All capabilities but only to select groups,
* Broadly, but there are some capabilities that will go only to select groups or people, and
* Other

Clearly, the vendors would like organizations to roll out UC to everyone in the company, and 22% of respondents will be doing that; however, as Figure 5 shows, nearly 70% of companies will be selective to with respect to what UC capabilities they roll out and to whom they roll them out to.

Figure 5 Will UC be rolled out to everyone or selectively (end users only).

In addition to asking if companies would be selective regarding whom they roll UC out to, we also asked about the geographical scope of their deployments. Specifically, we asked if companies would roll out UC globally, regionally, in-country, or in some other way.

The data in Figure 6 roughly parallels the respondent company size data. While 43% of the respondents were from companies with 10,000 people or more, which would typically imply a multinational footprint, a corresponding 38% of the deployments are expected to be global. Similarly, 31% of the respondents work in companies that have between 1,000 and 10,000 people, and 30% of the deployments are intended to be in-country. The number of in-country-only deployments was a bit surprising (higher than we would have anticipated) given that companies with 1,000 people often have divisions or people residing outside of the headquarters country.

Figure 6 Geographical scale of UC deployments (end users only).

UC MINDSHARE

Wainhouse Research asked respondents, without prompting, which vendors come to mind when they think of unified communications. Respondents could write three company names down.

Among respondents from this survey, Cisco is the mind share leader when it comes to unprompted “blind” recognition coming in at 30%. Microsoft follows closely behind at 26%. After these two, recognition as a leading UC company drops off dramatically. Avaya came in at 4% and Nortel garnered 3% of respondents mentioning them first. Interestingly, Polycom and Tandberg show up as UC leaders. This is probably due to the collaboration and video audience Wainhouse Research caters to. IBM was listed first by only 2% of respondents, which was surprising, given the number of large companies that use IBM infrastructure, software, and services.

Other companies mentioned as a second written UC company include Siemens, Alcatel-Lucent, Radvision, AT&T, Dell, Elluminate, Citrix, Wimba, Mitel, BT, Genesys, Foundry, and Aethra.

Additional companies appearing as the third UC company include ShoreTel, Interactive Intelligence, Sony, Asterisk, AVST, Novell, Glowpoint, Marratech, and Adobe.

UC PRESENCE/IM ENGINES AND CLIENT ADOPTION

Respondents were asked what their company’s position was with respect to a number of vendor offerings, including if they were

* Currently using them,
* Considering using them,
* Not considering using them,
* Didn’t know, or
* Had never heard of it.

As Figure 7 shows, Microsoft has increased its lead among those who have deployed OCS or who are considering deploying it from 45% in 2007 to 69% this year. Cisco has had a similar increase from 35% in 2007 to 51% in 2008. Thus, the chart below indicates that over 50% of the UC client market is using or is considering using either Microsoft OCS or Cisco Unified Personal Communicator.

Figure 7 UC client usage and adoption plans (end users only).

After Microsoft and Cisco, the number 3 position goes to public IM clients, which sum to 32% of companies either using them or considering using them. The use of Skype is also of interest.

WR provides readers with this caution when looking at these figures. They do not indicate how broadly a particular client has been deployed within an organization, nor do they indicate how many licenses have actually been purchased.

As Figure 8 shows, when the data is analyzed for companies over 10,000 employees in size, IBM gains a little ground on Cisco but Microsoft remains dominant. In this sort of the data, 69% of large company respondents are either using OCS now and or they are considering it. This compares to 35% for IBM Lotus Sametime and 48% for Cisco Unified Personal Communicator. IBM gains about 13 percentage points if only large companies are considered versus companies of all sizes. Of note is the fact that 42% of very large company respondents say they are using OCS now versus 27% for IBM Lotus Sametime and 13% for Cisco UPC. This does not suggest that OCS is rolled out completely among 42% of the companies, but it is certainly a strong indicator of its future position in the market.

Figure 8 UC client usage and adoption plans for companies over 10,000 employees (end users only).

SERVING UP SERVICES

Wainhouse Research asked respondents to tell us which professional or consulting UC services they had already paid for or that they would pay for. We were interested to see if there was a real market for UC service offerings from the vendors and from ISVs and VARs. The results are mixed. Clearly, there is no overwhelming trend toward outside services. The services most likely to be used are implementation/integration, UC strategy, and UC solution design (Figure 9).

Few companies will seek or pay for monitoring, optimization, or RPF creation services.

Figure 9 UC professional/consulting services companies will or have paid for (end users only).

CONCLUSION

In this article, we have attempted to provide a glimpse of what end users think regarding how to deploy unified communications, and we have revealed that there is very little project management or process applied to UC implementations. We have discussed who the decision makers are when it comes to purchasing UC solutions. We have identified which vendors have developed market mindshare and which UC solutions are gaining traction. Finally, we have provided guidance on the kinds of UC services companies may pay for, which suggests to us that the UC services market is likely to be smaller than many, including ourselves, have previously predicted.

The UC market is still nascent. A lot of hype exists regarding market size, who will compete against whom, and who will consume whom. At the end of the day, it is the users who will buy and implement UC, but we are finding that few are doing a needs analysis or any kind of a needs assessment and that few are developing a UC strategy. We believe that failing to apply any standard technology deployment process will likely cause future challenges for a number of companies. Clearly Microsoft, Cisco, and IBM lead the way with respect to solutions deployed. For additional survey results, check out the rich media metrics section of our website.

E. Brent Kelly, Ph.D., is a senior analyst and partner with Wainhouse Research, specializing in all aspects of unified communications and collaboration. This article is based on data from a recent survey titled, "Rich Media Metrics: Unified Communications and Collaboration." He can be reached at [email protected].