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If you're considering Unified Communications, would you go with a premise-based solution or hosted?
This is a fundamental decision all businesses have to make when looking at UC. This is one of the many topics we'll be exploring on tomorrow's Demystifying UC webinar. Hope you'll join us!
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11 Answers
I guess I'll be the odd man out on this topic. As a vendor of on premise equipment, much of my business is replacing hosted system after customers tire of the quality issues they have. You don't have too look to far to find someone trying to sell a few dozen phones that are 12 months old, because they have given up on the hosted plan.
And, is hosted just a new name for what we had with Centrex. After all, it was all maintained by the telcos, no hardware except the phone, no maintenance, etc. Many companies used Centrex for decades, but eventually realized that the ongoing montly expense of Centrex didn't pencil out when you capitalized a system, and paid low maintenance fees to maintain it.
First lets look at the capital cost of the equipment. Buying this equipment on a lease is no different than paying a monthly premium to a hosting company. With one major exception - the lease ends, the monthly expenses on a hosted plan never does. It's the holy grail for any business - recurring revenue. Why wouldn't companies promote hosted plans, it has the recurring revenue stream that is difficult to get with on premise equipment.
The cost of hardware is incredibly low today versus old legacy equipment. WHen you can put in two servers and provide a High Availability Core for a phone system, with loaded software, the cost is low, compared to a room full of equipment from the old days.
Having the flexibility to build the features you want, and can't get because the platform doesn't support it in the cloud is huge. Don't get me wrong, Unified Communications is a hot buzz word, but we were unifying communications 12 years ago even with Legacy System. Yes, there are more features today, just like we didn't have twitter or facebook a few years ago. Things evolve.
Today, the investment is in the phones. Buy standards based phones that are good quality, and you can swap from hosted to premise based at will.
I'm sure I just opened the gate for criticism from the hosted camp, but I'll put my system up against theirs any day - ans show dollar for dollar the savings. A a face to stair at when it doesn't work, rather than a phone call with someone, somewhere.
If you decide hosted is the right avenue for you, ensure you have a direct connection to your hosting provider - a facilities based service, with no best effort internet connection between your premise and their switch. Without this, there is no way of ensuring Quality of Service, and the business class service you need to run a business.
If you are in Anytown Midwest, US, and your hosting company is in East Cost Metro, US, how can you ensure the bandwidth you need, unless you have been provisioned with an engineered solution that removes the best effort connections, and ensures the quality of service from Piller to Post.
When deciding on a “premise based” or “hosted” telephony system, think about the day-to-day operation of an on-site IP Phone system. Is your support staff prepared to service the phone system with patches, daily backups, directory services, MACs, carrier contracts, etc.? Is training an option for you and your staff? Is contracted maintenance available? Maintenance can be expensive for premise based and it can be under-estimated so beware. How will UC (Unified Messaging and presence included) be utilized by your company? The manufacturer or VAR can help you understand their system’s capabilities and requirements, but I recommend you speak to other customers as well as search the web for customer experiences with the system. An unbiased opinion could be invaluable.
If not premise based, then a hosted solution may be beneficial for your organization. Your next challenge will be to identify the benefits and risks introduced by each of the competing hosting vendors. These include;
- MACs
- WAN links
- location proximity
- reliability
- security/privacy
- overall system performance
- power
- environmental
- etc.
You will also need to make the business executives aware of all the risks and benefits, and how you intend to mitigate the risks. Examine the vendor’s proposal closely. Remember to think about single points of failure (risks) and mitigation.
Saving money is secondary to reliability and security when selecting a hosting vendor. The cheap solution is usually not the wisest, but the most expensive solution may not be best for your company. Search the web for unbiased customer experiences and ask the hosting vendor for customer references. Then compare the costs of premise vs. hosted – best estimates.
Regarding cost; your financial folks will want to be involved as this decision becomes CAP-EX vs. OP-EX. Think about the decision and the cost of implementing it as well as the costs involved with reversing it some years down the line - if necessary. System removal/replacement in the future is a very important point to consider. Do not under-estimate costs. I recommend building in some fluff budget in the guise of services or wiring so you are prepared for the inevitable gotcha.
Communicate, communicate, and communicate. Business area executives are required constituents and need to be involved (re; Executive Sponsorship). Phones affect everybody, so don’t under-communicate. Running pilots will be helpful, so perform them when possible.
The answer is anything but obvious, and this may be the most visible decision that IT will ever make. However, the proper choices and a well planned implementation can bring great success and kudos, so do your homework.
This is an interesting question Jon. I think it really depends on the customer's needs, size, applications, geographic locations, IT headcount, etc. It also comes down to the other side of the coin with who are the trusted advisors or VARs that a company is looking at. Ultimately, if a company is looking to go hosted (as more companies even in the enterprise space are now) they have to make sure they are working with a provider that has not only the bandwith, geographic redundancy, and referenceable customers but also the technical expertise (in numbers) to service those customers in the event of a failure. Our company comes across this scenario each and every day and its interesting to find how some companies are still wanting to look at premise-based and only that (which is fine, because we do that very well). But there has been a great shift in thinking recently with some mid size to enterprise companies that are looking at hosted and/or a managed service solution. As you know, a lot of companies, especially in today's company, are light in headcount and trying to make do with what they have. That's where the hosted or managed solution comes in to help companies lighten their load and not have to worry about the day to day management (especially as you get into some of these companies with several, silo sites). So I guess to answer your question, it really depends on a lot of things. I am looking forward to your webinar tomorrow.
Thanks Patrick. Sure does depend - there's a good case for both. Glad you can join us tomorrow.
As Patrick points out, there are many variables to consider when thinking about going hosted. That said, this solution provides many benefits when compared to the premise-based solution. In today's economic climate (yes, the recession is still going strong) the most common reason to select a hosted solution is money. With premise-based purchase solutions costing up to tens of thousands of dollars up front, the hosted solution provides same quality, features, etc with the possibility of free tech upgrades after the initial three year contract, all at ZERO up front costs. When most small to mid-sized businesses compare the two solutions, this fact sticks out like a sore thumb. When they realize that they can have absolutely everything that they get in a premise-based solution, at a zero cost basis up front, most will look in this direction. When they can also possibly get free system upgrades every three years, with all new tech and bells and whistles, they look even closer...and start their mouths watering. This really leaves the major issue of, as Patrick pointed out, of having a company that has the proper technical and customer service metrics in place to back it up.
Having owned my own business also where we implemented an on premise based system, I would strongly recommend hosted.
The cost of keeping up with the on premise system far outweighed the benefit of being able to customize and control how the system was being used. Updates were painful and hardware cost and maintenance escalated.
Hosted vs Premise based depends on a few items...
- If Telephony, and email is already hosted in the cloud,
the natural approach would be hosting UC as a service(UCaas).
- Size and location of offices, bandwidth to the
cloud preferably secure well-managed bandwidth offered by cloud providers should be considered as well. Often personal grade bandwidth such as cable/DSL for home use is considered sufficient, but business grade links should be prefered in favor of personal grade links to ensure quality of cloud-based offerings.
- Lack of qualified resources to manage premise-based solution are most times a driver to go hosted for any offering.
- Integration and use of social media and UC becomes an important decision point as well for those companies allowing social media. This could mean the difference between hosting or premise-based. Dealing with social media access located in the cloud is much easier from a security standpoint than dealing with social media accesses to premise based solutions.
I see more and more companies are opting for hosted solution specially in today's economy. Telephone and Cables companies offer larger and stable Internet bandwith that users are not even aware of the solution is hosted.
Jon, you've received some very well written responses to your question.
In my opinion, the decision is really structured around the companies existing IT culture. As an example, if a company has the staff to implement and maintain the UC environment the premise based solution is a smart decision. If a company desires to have it's IT needs outsourced, then a hosted solution will best meet their goals.
Todays solution sets are so structurally strong, the user will not be aware of a hosted or premise based solution.
A key factor in implementing UC is integration with the other systems. After all that is what UC is all about. Cloud computing (hosted) is great in many instances but it does present a number of challenges in integration. Some things are simple (i.e. voice mail to email) others are more complex (like integration with SalesForce.com or another inhouse or cloud application).
I always recommend you spend time determining what you want and want you absolutely need and then start overlaying solutions on top of those two lists.
Money and strategy will dicate what a company goes for. If you are short on capex, then hosted may be best for you. Equally if your company has a strategy of outsourcing and/ or hosting data, then culturaly you may be inclined to go down this route.
There is no right or wrong answer ... red wine versus white wine ... what do you prefer and what fits best right here and now?
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