Unified Communications Get ‘Mixed’ Reviews from European MNCs

| October 29, 2007 | Business Telecom Services - Europe | Advisory Report (Europe)

| Analyst: Dustin Kehoe

Issue

The motivation for deploying IP telephony is more strategic. Customers are moving beyond ‘cutting costs’ to enabling new applications that promise to transform how employees interact and communicate in the corporate environment. Enter unified communications. In this brave new world, the service provider does not control all aspects of the services end to end, but will have to work with an ‘ecosystem’ of partners at all levels to manage the delivery of an ever-expanding range of new services. Meanwhile, suppliers (both new and old) will have to become more accustomed to working together to deliver against customer expectations.

This advisory is a synopsis of some of the themes discussed at the EVUA event, ‘IP Convergence and Unified Communications,’ held in Amsterdam, Netherlands between October 16 and 18, 2007. The EVUA is an end-user organisation of 70-plus MNC customers representing an ICT spend of EUR 3 billion.

Current Analysis Perspective

While the term 'unified communications' (UC) means many different things to different customer segments, most enterprise customers at the EVUA event are buying into UC, at least 'conceptually.' This is underscored by the trend that IP telephony is moving from a pure 'cost-savings' move to a 'strategic path' to enable so-called productivity applications. While there was no shortage of ideas and possible approaches to UC, EVUA members are not clear on which services they would like to deploy and vendors they will support. They are also unsure how to integrate these new applications with existing platforms and systems, as well as the impact these new services would have on their underlying network infrastructure. There is also a realization that making a corporate business case for UC could be very difficult. Equally, service providers also have strong visions on the types of services that they would like to deploy, but they need more feedback from customers and to see how various equipment vendors would work together to give the customers a more integrated experience.

Theme 1: Microsoft Threatens the IP PBX Market

Due to Microsoft’s announcement of the global availability of UC products (e.g., Office Communications Server 2007, Office Communicator 2007, Office Live Meeting 2007, Roundtable), there was a lot of discussion on how Microsoft would change the UC environment. The consensus is that Microsoft’s plans to enter into this space are very significant and that it will have a huge impact on the UC market. However, while most service providers will include the new Microsoft products in their respective UC product roadmaps, most enterprise customers have no firm plans to deploy any UC services from the company for the time being. Yet, both service providers and enterprise customers are all very keen to hear what Microsoft has to say. While all suppliers stress their willingness to work with each other in support of an open-standards environment, it was also clear that customers are not convinced. The question in the back of some minds is how long Microsoft will need IP PBX vendors. What are the implications (or cracks) within these partnerships that might surface as Microsoft begins to enter the IP PBX market in direct competition to major suppliers? On the one hand, there is agreement that no single supplier will provide all the pieces of a UC vision and an expectation that partnerships will be more prevalent than ever before. On the other, most enterprises know well that vendors may not be so willing to work together. It is safe to say that the speed of UC deployment is directly related to vendors’ perceived willingness to cooperate. In a closed session meeting, one customer pointed out difficulties in getting Microsoft UC products to work across IP telephony clusters. When a system integrator was called in to resolve the issue, the vendor in question was reluctant to support it. It is uncertain if this is a one-off case or an indication of what could potentially lie ahead. If vendors are not working together, the market potential for UC will not be realized.

Theme 2: SIP, Security and Interoperability

Another theme discussed was the development of SIP. While SIP is the protocol that will be used to deliver the multimedia applications that underpin the unified communications vision, it also raises a number of concerns. First, SIP is not fully standardized. As a result, there is reluctance to deploy SIP in the enterprise environment, especially when each vendor has their own proprietary extensions to give their products richness and differentiation. While service providers have worked to deliver interoperability in a multi-vendor IP PBX environment, there is little sign of this extending down to desktop applications, such as OCS 2007 or Lotus Sametime. This will be a big focus in 2008, as customers will demand interoperability with their existing IP PBX real estates. They will also want BlackBerrys, which are prevalent in the corporate environment, to work in the OCS 2007 environment. This will be difficult, as they are based on separate operating systems. Without more work here, it could actually be an implementation nightmare for telecom and IT managers to deliver UC products. One customer commented that it is not the cost of the applications, but the cost of integration that could be a showstopper for UC.

Other issues with SIP have to do with the practicalities (and potential costs) in implementing the solution in the LAN environment. For one thing, SIP is typically not supported by managed firewalls. In general, SIP traffic is recognized as ‘unwanted’ and blocked. There are also problems with SIP working with network address translation (NAT), as internal IP addresses are not visible outside of the firewall. While SIP is considered to be the glue behind UC, there will be some work involved by both customers and carriers in delivering these capabilities. Most customers will have to invest in upgrading their infrastructure (and devices behind the firewall) without compromising its security posture. UC, for example, could lead to an increase in spam attacks. Equally, service providers will need to invest in ensuring they can deliver SIP across their network and guarantee QoS and billing. Most service providers are just at the early stages and plan to upgrade their session border controllers and offer SIP/H.323 extensions in 2008. The bottom line is that, in most cases, unified communications will require new investments on both sides (i.e., enterprise customer and service provider).

Theme 3: Making the Business Case

Some of the general concerns raised by enterprise customers include the fact that it is difficult to make a corporate business case for unified communications. While there is a promise of new applications, improvements in productivity and reductions in human latency times (through presence and IM), it is difficult to quantify any of these numbers in terms of savings or tangible customer benefits. However, it was also noted that there was never a business case for the BlackBerry, but the devise has become ubiquitous within the corporate environment. There was also never a business case for e-mail.

Due to the difficulties in developing a corporate business case for UC (and the general shortage of ideas from suppliers), customers may have to try to get it implemented from the top down. Some enterprise customers have noted that there is a lot of pressure from UC suppliers at the C-level of the organization. If executives are influenced by their suppliers, this could clear the way for UC without the business case. Some have alluded to this as a BROS syndrome (an acronym for “bright and shiny objects”). It is clear that UC is at a standstill. Many customers need more help from their suppliers to get a high-level strategic buy-in in order to move UC into their network. It is also plausible that UC will be driven from IT departments (as opposed to telecom departments), where software vendors such as IBM and Microsoft tend to have more visibility than traditional carriers.

Recommended Vendor Actions

• Service providers should continue with their respective plans to offer Microsoft OCS products in their UC product portfolios. While customers are not quite ready to place large orders, they are interested in these products (at least conceptually), and they are tracking developments at Microsoft closely. There are some segments (e.g., remote workers, teleworkers and road warriors) that could benefit greatly by having IP PBX features embedded into desktop applications.

• Service providers as well as equipment and software vendors should do more to help enterprise customers build the business case for unified communications. This is a stumbling block that customers are experiencing in paving the way for a UC roadmap and winning support for internal sign-off. Suppliers should also continue to get executive-level support behind the UC vision to drive the market forward.

• Equipment vendors should consider that UC will require both service providers and enterprise customers to make new investments. While carriers would be most interested in products that support SIP trunking, customers would need products that will allow SIP traffic to work with existing firewalls without compromising security posture. This could mean new professional services opportunities for carriers and system integrators.

• Industry heavyweights, notably Microsoft and Cisco, should do more to convince customers that they are willing to work together in delivering unified communications. Customers will not go down this path as aggressively if they fear that they are investing in more stovepipe products that do not integrate and vendors are reluctant to cooperate. UC will be a major growth area and it will involve new types of alliances and partnerships that the telecom industry has not seen before.

Recommended Vendor Actions

• Enterprise customers are correct to take a ‘wait and see’ approach on unified communications. While there are many layers and complexities to UC, it is far from certain how the different equipment vendors and software providers are willing to work together. The issue of OCS 2007, for example, not being able to integrate with BlackBerrys will not go away anytime soon.

• MNCs should ask their provider for SIP trunking services. While many carriers have some plans to offer this, Verizon Business is the only major international carrier to offer these capabilities today. This solution will be important for delivering unified communications. There are also other benefits to SIP trunking. It can route VoIP traffic without using premise-based gateway equipment and it allows users to reduce (or potentially eliminate) their ISDN real estate. Since SIP trunking works without TDM/IP conversions, there could be improvements to QoS.

| Client Access - Full report in Business Telecom Services - Europe module | More Information |

Top