The same reasons you've turned to cloud computing to handle your business' IT functions also apply to unified communications. So what's taking the sector so long to catch on?
Cloud services have been popular among small and midsize businesses, however, one area where the technology has been slow to take hold is unified communications. Recently, bMighty blogger Paul Korzeniowski talked with James Whitemore, chief marketing officer at Smoothstone IP Communications, about the cloud unified communications marketplace. The vendor offers a variety of voice services: Voice over Internet Protocol (VoIP), IP trunking, unified threat management, MPLS networking, contact center solutions, and messaging and collaboration tools. The company's focus is on corporations with 150 to 2,000 end points and multiple locations, from say five to 25. Currently, Smoothstone provides service to around 60,000 end users in markets, such as health care, manufacturing, and financial services.
bMighty: Vendors use differences terms (hosted, SaaS, cloud) to describe their services. Do you see clear differences among these terms?
James Whitemore: Not really. A lot of the differences stemmed from the industry's Flavor of Day. This segment started to take off with the advent of hosted services, but then it became a dirty word. One issue was providers often offered only a vanilla set of services. Eventually, tools emerged, so customers can tailor the services, and different terms arose. Despite the diversity, there are some common elements in what the various cloud unified communications vendors do. They take the responsibility for managing a company's telecom infrastructure from the customer and run it for the client.
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bMighty: What do see as the potential benefits of unified communications cloud services?
Whitemore: IP communications is helping corporations transform their businesses, cut costs, improve communications, and streamline operations. While all of our sales start with an emphasis on basic voice services, they quickly move to more sophisticated applications, such as collaboration, messaging, and security. By deploying them, businesses can realize significant benefits.
bMighty: Why has the cloud unified communications market traditionally been slow to take hold?
Whitemore: Our prime competitor is often the customer itself. Companies have managed their communications system themselves for many years, so why would they want to change and work with someone like Smoothstone?
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Complexity is one factor forcing their hands. A number of corporations have seen the need to move to an IP communications platform. Typically, they have put in one, two, or three IP communications applications, such as an IP PBX, Web conferencing, or even telepresence. However, they begin to realize that they have deployed isolated islands of technology and need to take a different approach to manage these applications in a unified manner.
bMighty: What else is driving interest in these services?
Whitemore: A key issue is scalability. Today, companies are not sure what the future holds. Many typical business scenarios are unpredictable, so companies' communication usage patterns can go up and down dynamically. Typically, corporations come to us after an acquisition, divestiture, or merger -- a significant, fundamental company change. With subscription-based services, they can pay as they go. They are no longer locked into fixed costs, like telco services, so they can fine-tune their usage and their business models in dynamically changing competitive environments.
bMighty: How has the economic downturn impacted your business?
Whitemore: It has actually helped us. Our first quarter showed about a 60% growth from 2008, and Q2 looks like it will be similar in profile. The economic conditions faced in the past six month convinced customers that they need to try and do something differently. Companies have zero dollars to spend on capital expenditures. They can't buy anything or can't hire anyone, but still need to deliver new services. The only way to do that is to change how you have been operating.
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In addition, there has been a growing acceptance of outsourcing. In fact, the IT industry is going through a paradigm shift, starting with the outsourcing of basic computing infrastructure, such as Web servers. Whether they are a Fortune 500 firm or a startup, companies now understand that they do not need to own and operate their own Web application servers. This is especially true in our market segment. Midsize businesses do not have the skills or the capital needed to manage such expenditures to go buy and deploy it themselves. The hosted models provide viable alternatives.
So, gradually, the benefits of cloud computing have been translated to the telecom environment. The average midsize business has struggled to maintain aging technology and to acquire the resources needed to maintain its communications platform. Much of the work is spent on basic maintenance: patching things to keep the system running, tuning the equipment, and managing telco services contracts. If a company moves to cloud services, then it no longer has to focus on those issues.
bMighty: Which unified communications applications are gaining the most attention?
Whitemore: We lead with voice services and management tools, such as call reporting and call flow management -- the basic items that a company needs to monitor its voice communications. Typically, the first incremental service on top of that would be a contact center solution. Once customers start to become accustomed to IP capabilities, they start to think about it. They may not have used it before in their business because they may have thought it was beyond their requirements and capabilities. Security tools come in around the same time. Increasingly in the last few months, Web collaboration tools have seen a big uptick in acceptance. High definition video conferencing and telepresence solutions are stating to gain more attention.
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Paul Korzeniowski is a Sudbury, Mass.-based freelance writer who has been writing about networking issues for two decades. His work has appeared in Business 2.0, Entrepreneur, Investor's Business Daily, Newsweek, and InformationWeek.
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