By Irwin Lazar, VP and Service Director, Nemertes Research
UCaaS has garnered a great deal of attention in the marketplace over the last few years thanks to its ability to offer low cost, flexible, calling and unified communications services. Moving to the cloud enables organizations to shift responsibility for provisioning, operations, and management to a cloud provider, while also enabling them to take advantage billing models that only requires paying for what you use, rather than large up-front capital outlays.
Nemertes Research has tracked UCaaS adoption for the last several years. Our latest “Workplace Collaboration: 2019-20 Research Study”, based on data gathered from more than 600 end-user organizations operating in Western Europe, North America, Southeast Asia, and Australia shows that 19.1% of participants are now using UCaaS for their calling needs, while another 12.2% operate hybrid environments containing a mix of UCaaS and on-premises or hosted options. For comparison, a year ago just 11.9% of participants used UCaaS, meaning that adoption has nearly doubled in the last year.
UCaaS adoption continues to be highest among small companies who often lack in-house IT expertise to operate their own platforms, however among large enterprises with more than 2,500 employees, 15.1% are using UCaaS.
The current adoption numbers are only part of the story. Of the 35.7% of participants who still operate on-premises platforms, nearly half (43.2%) are evaluating or planning to adopt UCaaS in the next two years. Meanwhile, of the 17.8% using hosted platforms operated and managed by a third-party provider, 62.6% are considering or planning to shift to UCaaS. Taking all these data points together, it’s clear that the UCaaS market is in the middle of a rapid growth phase entering 2020 and beyond!
The primary drivers for UCaaS adoption continues to be cost and scale. IT buyers like the predictability of subscription-based cost models, and the ability to only pay for what they need. In many cases the elimination of staffing, licensing for on-premises servers and maintenance, and PSTN access contracts results in lower costs though our overall research shows that for most companies, UCaaS results in higher first year costs before buyers realize savings in years 2 and beyond. From a scale perspective, UCaaS enables customers to easily add, or subtract licenses as needed, and to provide services in remote areas where the buyer may not have a physical presence. For example, some UCaaS customers take advantage of features that allow provisioning of local phone numbers in remote markets, or they use UCaaS to support home, remote, or contract workers outside of their normal operating region.
Adopting UCaaS does not absolve buyers of the need to manage voice services. Even as UCaaS customers shift operational responsibility to the cloud provider, they must still ensure that their own data networks deliver reliable connectivity and acceptable latency and jitter to support voice. And they must integrate their HR systems with their UCaaS providers to support automated provisioning of phone numbers as well as moves/adds/changes. UCaaS providers, at the same time, must deliver customer interfaces that are easy to use, and that enable automated provisioning, reporting, and feature management.
The market momentum for UCaaS is clear. IT buyers should consider UCaaS if they aren’t already, meanwhile service providers should focus on delivering simple to use, feature rich offerings that enable easy customer provisioning and on-going feature management.
