Page 3 - Telecom Reseller May-June 2017

May/June 2017 Telecom Reseller 3
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Cloud UCC Cost-Savings Fallacy: What You Need to Know
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NEMERTES’S LATEST UCC TCO STUDY REVEAL AGILITY AND THE ABILITY TO REFOCUS IT ON STRATEGIC INITIATIVES BEAT COST SAVINGS AS CLOUD DRIVERS.
GAREISS
by Robin Gareiss, President and Founder of Nemertes Research
When it comes to cloud, you’d think you’re either a fool or living under a rock if you’re not embracing it. So whenever a new technology, service, or architecture is allegedly that great, it’s always good to have some hard data to back up the claims.
When cloud rst emerged (or re-emerged under di erent labels, if you have been in this industry long enough), the big selling point was that it would save you money -- lots of money.
FOR THE MOST PART, THAT IS NOT TRUE.
Overall, companies that move to the cloud for uni ed communications and collaboration (UCC) nd their rst-year costs increase
by 47%. First-year costs include capital, implementation, and operational. Operationally, a er the rst year, costs are 87% higher overall, according the Nemertes 12th annual UCC Total Cost of Operations study involving interviews and surveys of 723 organizations.
A FEW NUANCES ARE WORTH NOTING, HOWEVER:
● Smaller companies moving to UCaaS see cost
TURHUNE
However, in the haste to digitalize their business, introduce new avenues to better service and access all that the cloud provides, communication service providers (CSPs)
can forget to strategically and thoughtfully implement cloud technology and cloud computing applications. Before jumping head- rst into the thoroughly promising and equally as complex world of the cloud, telecom operators should consider some best practices prior to implementing a full-scale cloud infrastructure.
BEST PRACTICES
In order to make the most out of the time, investment and resources needed to successfully implement cloud platforms like Salesforce, what best practices should telco providers consider before and during implementation?
DIVIDE AND CONQUER
It’s all about incremental success. Companies need to identify a couple of di erent departments where its easiest to apply change initially. By identifying a few di erent use cases and picking those o one by one, telcos can remain focused and achieve quick success. With this strategy, telcos can see roundup
to deployment in six months. For example,
savings. For example, those with fewer than 50 employees see a 5% overall savings in rst-year costs, and 6% savings a erward.
● Larger companies moving to both UCaaS and hosted (single server) services see cost increases. For example, companies with 2,501 to 10,000 endpoints spend 24% more in rst-year costs for UCaaS, and 28% with hosted services.
What’s driving these operational cost increases? It’s a combination of a few areas: sta ng, subscriptions, network transport, and security audits.
ough conventional wisdom says a move to cloud means sta reduction, that is not the case. We rarely nd that companies lay o employees and reduce overall sta ng costs. IT sta s are spread too thin as it is. Rather, they reassign sta , typically to more strategic areas within UCC.
Figure 1, below, shows overall number of full-time equivalents for four core areas among companies with on-premises deployments
and UCaaS deployments. is chart re ects all companies, all sizes.
Data varies based on the size of companies, but a few consistencies exist. In all sizes, break- x (or the technical, day-to-day operational functions) decreases. Managing the partner relationship and interacting with the business units increase. Programs to improve user awareness and adoption increase for larger companies, and decreases for smaller companies.
one California CSP, Telnexus, just recently implemented the Salesforce Sales Cloud to enhance their legacy infrastructure. By doing this in addition to leveraging Conga’s document generation app Composer, they ended up increasing productivity by 100x.
CONTINUALLY UPDATE
Once implemented, telcos must continue
to enhance functionality. With Salesforce in particular announcing about three releases every year, companies would be remiss not to bring that technology forward and enhance its functionality.
Each of these releases feature numerous enhancements as varied as incremental steps to ease lead conversion to broad updates to user interface. Additionally, CSPs should take full advantage of the AppExchange.
Salesforce’s marketplace for third-party applications like Conga Composer to make the most of Salesforce investments and create and manage documents.
TELCO GETS CLOUDY
e telecom industry is notoriously known as having extremely complex, legacy IT infrastructures. ese systems are bogged
Overall, sta ng goes up by 4% (in 2016, that gure was 6%). Among larger companies with more than 2,500 employees, it increases by 45%; smaller companies with fewer than 500 employees see a 20% decrease.
Of course, sta ng is only part of the picture. In addition to people, companies now must pay a monthly subscription to the cloud service for which they weren’t previously paying. What’s more, 38.2% of companies say their network costs increased by 23.5% because more tra c is traveling over the WAN. At the same time, 27.5% say their costs decreased by 18.3%. Typically, the decreases resulted from negotiating better prices vs. reducing capacity.
As Nemertes formally releases the details of the research this month, we’ll show provider- speci c gures -- meaning, what companies actually pay, all-in, for various providers.
e gures include PBXs, servers, licenses, handsets, implementation, sta ng, managed services, equipment maintenance, subscriptions, and training. Providers that received enough response from the study to be counted individually include: Alcatel-Lucent Enterprise, AT&T, Avaya, Cisco, 8x8, Google, IBM, Microso , Mitel, NEC, RingCentral, ShoreTel, Verizon, and Vonage.
We also have found -- and will provide supporting data -- that operational costs
drop fairly substantially when companies use performance management tools and operational management tools from companies such as
down by costly on premise data centers that are di cult to upkeep. Enter the cloud, which has completely shaken these systems up and changed the way telecommunications organizations are replacing legacy IT systems with new technology.
Seeing the advantages of a cloud-enabled future, the telco space has been fairly quick to adopt cloud technology for di erent use cases. Unlike other entrenched industries that are entrenched and slow to adjust (ahem, nancial services) the telecommunications industry has a stronger mind to be innovative and adopt this type of technology.
Why? e telco industry is in charge of the datacenters that are essentially the backbone of business.
CLOUD ROI
e cloud, and applications like Salesforce, provide much faster speeds to market and innovation capabilities over legacy IT systems. e old deployment lifecycle in telecom usually included a three-year build out of complicated technology across many di erent departments.
For example, with Salesforce’s demand and expand strategy, it gives companies the ability to very quickly deploy the technology and subsequently, make changes and updates to the
Integrated Research, Riverbed, Unify Square, and Voss, among others.
Despite costs not being what many thought they would be by shi ing UCC to the cloud, most companies are (and should be) evaluating the architecture and services. Cost shouldn’t be the driver, though, for most organizations.
We’re seeing a re ection of the cost increases not only in the actual numbers, but also in
the drivers and inhibitors IT leaders cite. For example, in 2016 when we asked companies what was driving them to the cloud, 49% cited “perceived cost reduction.” at’s dropped to 33% this year. Also in 2016, only 21% cited cost uncertainty as an inhibitor to the cloud; that’s nearly doubled in 2017 to 41%.
Cost very well may be one reason 15% are not considering cloud at all this year, up from 9% last year. But providing organizations go into cloud decision-making with realistic expectations, they should nd success. Agility and the ability to refocus the IT sta on strategic initiatives, in my opinion, are the most compelling reasons to move to the cloud. ■
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various applications that run on the platform. is gives executives and IT administrators
the ability to incrementally address di erent solutions one at a time, therefore making innovation quick and e cient. Furthermore,
by adopting and regularly updating cloud applications swi ly, it gives the telecom industry the opportunity to be nimble and remain competitive over OTT providers like Google and Apple.
A CLOUD-ENABLED FUTURE
e cloud as a whole is critical to bringing
the telco industry forward in today’s digital
age. What’s truly great is this is possible by adding to and taking advantage of already
lane infrastructure. By adopting this cloud technology, telecom providers will nd that it can cra a much better customer experience – far better than the experiences they’re known for.
Even as subscribers and consumers continue to “cut the cord,” it’s a simple fact that these services will always require some level of infrastructure from telecom providers. By adopting platforms like Salesforce, telecom providers can reduce costs and better position themselves to provide the service and technology that subscribers expect. ■