An Overview of a Rapidly-Transforming Enterprise Communications Environment E-01: Setting the Stage...

E-01: Setting the Stage

An Overview of a Rapidly-Transforming Enterprise Communications Environment

Frank StinsonPartner & Sr. AnalystIntelliCom Analytics

Introduction and Overview Key Trends That Are Driving Transformation of the Enterprise Communications Space:

– A Competitive Landscape Disrupted by Fundamental Architectural and Business Model Changes

– The Emergence of Advanced Unified Communications (UC) and Collaboration Solutions Delivering Targeted Business- and End User-Specific Value

– New Options Blending Premise- and Cloud-Based Capabilities to Deliver Advanced Applications to Specific Job Functions and Individual Users

– Virtualization Initiatives Supporting All-In-One Packaging of UC Software Suites And Data Center Consolidation Efforts

How These Emerging Capabilities Factor Into Current Enterprise Deployment Plans

Key Parameters to Consider in Evaluating Voice and UC Providers

How Current Market Leaders are Positioned in This Context

Summary and Discussion

Focus Of This Session

2

$-

$500,000,000

$1,000,000,000

$1,500,000,000

$2,000,000,000

$2,500,000,000

1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08 1Q'09 2Q'09 3Q'09 4Q'09 1Q'10 2Q'10 3Q'10

Cisco

Avaya

NEC

Mitel

Toshiba

ShoreTel

Others

Source: IntelliCom Analytics, IntelliCom Market Performance DashboardSM

, September 2010

Enterprise Communications Manufacturer Product Revenues – North America 1Q’07 to 3Q’10Beginning of

Downturn

-8% -24% +6% -27% -29% -16% Year-Over-Year Growth +12%

The Enterprise Communications Market Grew Strongly During The First Three Quarters Of 2010 After Experiencing A Historic Downturn At The Onset Of The Recession Which Impacted Even The Most Stable Of Providers

-4% -1% -6%

3

+8%

4

The Downturn Coincided With Fundamental Delivery And Business Model Shifts – Now Accelerating – That Are And Changing How Business Communication Solutions Are Delivered And Who They Are Delivered By

Business Process Integration, Productivity Enhancement, User

Experience, Incremental RevenueInfrastructure

Convergence, ROI / TCOReliability,

FunctionalityKey Customer Decision

Attributes

Applications / Solution Design and Integration, Business Consulting

Shared Responsibility Management (Managed and

Hosted Services)MaintenanceServices Model

Open Standards and Hardware Support, Session Management,

SaaS/Hybrid Delivery Alternatives, SOA-based CEBP

Enablers

Proprietary Servers and Appliances

Central ProcessorSystem Architecture

Enterprise Community / User-Centric

Network and Enterprise-CentricSite-CentricDecision Focus

Voice as a FeatureVoice as an ApplicationVoice as a SystemPosition of Voice

TDM IP TelephonySoftware-Centric

Voice and UC

Source: IntelliCom Analytics, IntelliCom Market DashboardSM

19.5%

17.0%

22.3%

9.2%

8.6%

23.4%

We already have one deployed or are in the process of deploying one

We plan to deploy one later this year

Most likely 1 to 2 years from now

Most likely 3 to 4 years from now

Most likely 5 or more years from now

We do not currently anticipate deploying a fully software-centric architecture in the fu-ture

Software-Centric Solutions Are Rapidly Approaching Mainstream, As More Than Half Of Global Businesses Will Have Embraced This Approach By Two Years From Now

When do you anticipate deploying a fully software-centric communication architecture?

5

Percent of Global Decision MakersIntelliCom Market Dashboard

SM

/TMCnet Customer Survey (n=359), November 2010

6

Fully Proprietary

ProprietaryHardware

IndustryStandardHardware

Shrink-Wrapped Open Hardware

Delivery Flexibility

FeatureCustomizability

Fully Open

Traditional TDM Systems

Box-Centric Approaches

Solution-Centric Approaches

BCS Packaging Models

TDM/IPT Hybrid Systems

Native SIP IPT Platforms w/TDM-Enablement or 1st Gen

IPT Migration

Cloud-Based

Legacy

Evolutionary

Next-Generation

Premise-BasedBlended

1st Gen Proprietary IPT

All-In-One Voice/Data Appliances

Emerging Cloud-Based And Blended Premise/Cloud Solutions Add To The Growing Array Of Delivery Choices That Customers Must Evaluate In Making Current And Future Implementation Plans

30.1%

21.4%12.

8%

11.4%

24.2%

We would deploy all voice and UC applica-tions on premiseWe would deploy core voice applications on premise but with some UC applications in the cloudWe would deploy UC applications on premise but link them to a hosted voice serviceWe would use external cloud-based services for all voice and UC applicationsWe have no current plans for deploying a software-centric architecture

While Global Businesses Are Nearly Three Times As Likely To Prefer An All-Premise To An All-Cloud Voice And UC Solution Today, There Is Strong Receptivity To Blending These Delivery Mechanisms

If you were to adopt a software-centric Business Communications solution, would you prefer to deploy the applications it supports on premise or in the cloud?

7


SM


SMB And Mid-Market Customers Expressed The Most Support For Blending Premise- And Cloud-Based Capabilities, But Small Businesses With Less Than 20 Employees Were The Most Likely To Prefer An All-Premise Solution

IntelliCom Market DashboardSM

/TMCnet Customer Survey (n=359), November 2010 Percent of Global Decision Makers By Business Size


8

While Cisco, Microsoft, and Mitel Now Directly Provide Cloud-Based And Blended Solutions, Others Relying More Heavily On An All-Premise Model Face Greater Competitive Exposure To Third-Party Hosted Services

Percent of Global Decision Makers By Manufacturer


9

IntelliCom Market DashboardSM


Virtualization Initiatives Add To The Open Hardware Options For Customers To Consider When Deploying Next-Gen Voice And UC Solutions And Help Better Support Both Enterprise Data Centers And Mid-Market All-In-One Packaging

Proprietary Appliance

Virtualization Enabling Voice/UC

Co-residency

Traditional voice system packaging on separate, proprietary boxes produced by the manufacturer

Limited synergies with the rest of the customer’s IT environment

Appliance w/Open Components

Virtualization Enabling Data Center Consolidation

Software-Only on 3rd Party Server

Description Examples

Legacy TDM Systems

Call control and other communication applications run on open operating systems like Linux

Manufacturer utilizes open processor components to reduce costs but produces turnkey appliances for the customer to ensure availability

Voice system vendor produces only the software-based elements of the voice and UC applications

Customers and/or systems integrators chose third-party servers and devices based on guidelines and/or certifications

The provider utilizes virtualization technology to place multiple voice and UC applications onto a single server produced by them

This may save space and reduce power consumption while allowing the provider to position their full software suite at once

Voice and UC applications are delivered as software-only solutions that run on an open virtualization platform

This allows these applications to be deployed on common hardware with business applications deployed in the data center

Most mainstream IP-PBXs

Microsoft OCS/Lync 2010 Siemens OpenScape UC Interactive Intelligence

Avaya Aura System Platform Lotus Foundations (ShoreTel,

NEC)

Mitel vMCD Siemens OpenScape UC Cisco UCS

10

Desktop Virtualization

Thin-client desktop devices running all user communication and productivity applications displace the current PC model

All major user applications are shifted to centralized data centers broadly supporting the organization

Mitel/Sun Ray Mitel/VMware View Cisco VXI

14.5%

18.7%

28.7%

9.5%

10.9%

17.8%

Traditional TDM PBX

TDM/IP Hybrid PBX

Software-based IP-PBX deployed on packaged hardware from the same manufacturer

Software-centric architecture deployed on a standalone 3rd-party server(s

Software-centric architecture deployed on a common 3rd-party server(s) with UC applica-tions suite

Software-centric architecture deployed on a data center virtualization platform

While Virtualization Is An Important And Growing Driver, Less Than 40% Of Respondents Would Deploy A Software-Centric Voice Solution Delivered On Third-Party Hardware If They Were Forced To Make An Architectural Choice Today

If you had to make a choice to replace your primary voice solution today, what type of architecture would you select?

11


SM


Although Medium And Large Enterprises Expressed The Most Receptivity To Data Center Deployment Options Leveraging Virtualization, Larger SMBs Were More Supportive Of Software-Based Approaches In General


12

Percent of Global Decision Makers By Business SizeIntelliCom Market Dashboard

SM


While It Is Not Surprising That A Significant Portion Of Customers Of Legacy Providers Still Express A Preference For A TDM Or Hybrid Model, Roughly A Quarter Of Microsoft UC Customers Do Today As Well


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Percent of Global Decision Makers By ManufacturerIntelliCom Market Dashboard

SM


14

Core Call Control Platforms

Supporting Infrastructure

End User Devices

Centralized Management &

Provisioning

Communication- And Collaboration-Enabling Of Specific Business Processes (CEBP) Is Where Customers Will Ultimately Realize The Most Value From These Next-Generation Delivery Approaches

Unified Messaging

Presence Management

Instant Messaging

Mobility

Unified Clients

Comm. & Business Apps Convergence

Event/Process-Driven Automation

Reduced Latency

Creation of New Services & Revenue

Streams

IP Telephony Unified Communications CEBP

Infrastructure Convergence

PersonalProductivity

Business Transformation

Business-Specific BenefitsTechnology Driven Benefits

Shared Workspaces

Converged Conferencing

Telepresence

Enterprise Social Networking

Collaboration

WorkforceProductivity

Source: IntelliCom Analytics, IntelliCom Market DashboardSM

While Basic UC Applications Can Be Integrated With Some Legacy Voice Solutions, Advanced Collaboration And CEBP Integrations Tend To Require A More Software-Centric Approach

Source: IntelliCom Analytics, IntelliCom Market Performance DashboardSM

, September 2010

But New Voice Platform Deployments That Include The Full Range Of UC User Applications Still Account For Only About A Quarter Of New Installations Despite Considerable Vendor Push And Bundling

Core voice features included in new call

control solutions

UC user clients for accessing call control,

presence, IM, converged conferencing, etc.

Bundled licensing approaches heavily discount UC point applications in new voice platform purchases, but often these entitled capabilities are not deployed on an enterprise-wide basis

With enterprise decision-makers still not fully convinced of the value of higher-level UC applications, sales remain driven by a vendor push model

New tablet user devices and linkages to social networking applications are intended to reach individual employees and build pull for UC and Collaboration applications within organizations

Broader UC market definitions including Call Control and Unified Messaging make the market and adoption appear higher but obscure the fact that individualized UC productivity applications remain in the early adopter phase

Integrated access to voice mail and e-mail

applications

15

SIP Overlay And Session Management-Based Approaches Have Emerged From Providers Placing Growing Emphasis On Supporting A Multi-Vendor, Best-of-Breed Implementation Model

A single provider delivers an integrated architecture blending premise- and cloud-based elements across the complete voice and Collaboration spectrum

End-to-End Architecture Best-of-Breed Approach

Inherent cost in building a new infrastructure vs. leveraging existing investments

Locked into a single vendor that controls all the key mechanisms through which an organization interacts, with some capabilities more competitive than others

Implementation requires a cultural mindset change within IT and perhaps even the organization as a whole

Specialized voice vendors risk being marginalized unless they pursue high-profile joint-marketing and sales initiatives with those playing in broader collaboration layers

May require more upfront integration of disparate elements

Taken separately, individual pieces of a Collaboration value proposition may be less compelling to business stakeholders needed to build internal support

Customers select focused providers that are specialized in particular areas like voice and leverage open standards and interoperability initiatives to integrate with other value layers

Focus

Advantages

Disadvantages

A common infrastructure may deliver a tighter integration of underlying applications and have advantages in terms of management and policy administration

An integrated infrastructure for premise- and cloud-based applications may address security concerns that typically arise within IT as a result of end users accessing public services

Customers may find the “single throat to choke” value proposition to be attractive as well

May better leverage existing investments where infrastructure, communications, and desktop applications from multiple vendors are already in place

This approach may be attractive to those in organizations where voice decision-making remains reasonably independent of other areas of IT that have responsibility for other Collaboration point applications and preferred vendors for them

Can select best applications available in each segment

SaaS & Hybrid

Voice Apps

Open Source

Enterprise Apps

Core Voice

User Devices

Open Hardware

Increased Interoperability Support Coupled With Broadening Collaboration Value Propositions Has Disrupted The Competitive Landscape By Increasing The Influence Of Players In A Growing Number Of Adjacent Markets

IntegrationServices

17

http://www.cisco.com/

http://www.alcatel-lucent.com/wps/portal/!ut/p/kcxml/04_Sj9SPykssy0xPLMnMz0vM0Y_QjzKLd4w3cjUDSUGYpvqRKGIG8Y4IkSB9b31fj_zcVP0A_YLc0IhyR0dFAJgg_-M!/delta/base64xml/L3dJdyEvd0ZNQUFzQUMvNElVRS82X0FfMkU2

http://www.cisco.com/

18

While A Solid Core Telephony Foundation Remains Important, There Are A Number Of Architectural Enablers And Business Model Considerations That Will Drive Success As The Market Moves Toward Mainstream Acceptance of Software-Based Solutions

·Scalability·Survivability·Feature Set·Management and Serviceability·Interoperability

Providing a Foundationof Core Telephony Features and

Functionality

·IP vs. TDM·Distributed vs. Centralized·Device and Mobility Options·Hosted vs. CPE·Migration Strategy and Options

Current Functional Performance Deployment Flexibility

· Support for Open Standards· Software Centricity of Call Control· Platform Hardware Delivery Options· Business Applications Integration Initiatives· Software Provisioning/Licensing Approach

· Traditional Applications Portfolio· Unified Communications Focus· User Centricity· Business Process Positioning· Verticalization

Applications Infrastructure Applications Positioning

Building Architectural Enablers for UC and CEBP, and Positioning to Customers Based

on Their Specific Business-Level Impact

· Corporate Stability· Strategic Direction· Corporate Presence· Sustainability of Business Model· Market Position

· Solutions Focus· Business Value Proposition· End-To-End Solution Delivery· Customization Options· Go-To-Market Model Fit

Sustainability Solution Delivery

Executing at the Business Model and Go-To-Market Levels

IntelliCom Market Dashboard - Evaluation Parameters

IntelliCom Market Dashboard: Enterprise Segment Scores IntelliCom Market Dashboard: SMB Segment Scores

Deficient Challenged Competitive Well-Positioned Differentiated

Enterprise Segment = 1,000+ Users SMB Segment = 20-250 Users

Established Providers Still Have A Substantial Advantage Over New Entrants Like Microsoft In Terms Of Core Enterprise Voice Functionality And Deployment Options, But Lync 2010 Is Beginning To Close The Gap

CurrentFunctional

PerformanceIndex

Deployment Flexibility

Index

Siemens

Cisco

Avaya

3Com*

Microsoft

NEC

ShoreTel

Mitel

IBM

CurrentFunctional

PerformanceIndex

Deployment Flexibility

Index

Siemens

Cisco

Avaya

3Com*

Microsoft

NEC

ShoreTel

Mitel

IBMToshiba

Current Functional Performance vs. Deployment Flexibility

19

Source: IntelliCom Market Dashboard, January 2011 * 3Com voice portfolio now owned by HP


A Mix Of Traditional Voice Providers And New Entrants From Adjacent Markets Are Leading The Shift Toward Software-Centric Architectures And Targeted Business- And User-Centric Applications That Best Leverage Them

Applications Infrastructure vs. Applications Positioning



ApplicationsInfrastructure

Index

ApplicationsPositioning

Index

SiemensCisco

Avaya

3Com*

MicrosoftNEC

ShoreTel

Mitel IBM

ApplicationsInfrastructure

Index

ApplicationsPositioning

Index

Siemens CiscoAvaya

3Com*

MicrosoftNECShoreTel

Mitel

IBM

Toshiba

20

Source: IntelliCom Market Dashboard, January 2011 * 3Com voice portfolio now owned by HP

SolutionDelivery

Index

SustainabilityIndex

Siemens

Cisco

Avaya

3Com*

MicrosoftNEC

ShoreTel

Mitel

IBMToshiba

SolutionDelivery

Index

SustainabilityIndex

Siemens

Cisco

Avaya

3Com*

Microsoft

NECMitel

IBM

Ultimately, Market-Level Execution Will Be Highly Dependent On Changing The Customer Conversation At The Go-To-Market Level And Having The Necessary Resources Needed To Drive Related Business Model Changes



Solution Delivery vs. Sustainability

Source: IntelliCom Market Dashboard, January 2011


ShoreTel

21

* 3Com voice portfolio now owned by HP

The overall Enterprise Communications market has resumed growth but from a substantially lower position than prior to the downturn as customers adjust to budget pressures and attempt to make sense of evolving architectures and emerging applications

The market is now on the verge of mainstream acceptance of software-centric architectural models, but many customers still prefer to purchase such a solution as an integrated appliance packaged by the same provider as the software

While only a small minority of businesses would opt for an entirely cloud-based deployment model today, there appears to be wide-spread receptivity to blending premise- and cloud-based capabilities providing various combinations of voice and UC functionality

The rapid emergence and development of virtualization initiatives from a number of voice and UC providers over the past year has been met with strong receptivity among medium and large enterprise interested in leveraging this technology

While current leading UC providers are making good progress in adapting their delivery models to address, and in some cases help drive, the transition to software-centric approaches, ability to execute at the go-to-market level remains a key question mark for many

The pace of competitive developments among both traditional and emerging providers is accelerating as this transformation gains acceptance and momentum

Summary Points

22

Reach Information

1259 Route 46, Building 1Parsippany, New Jersey 07054-4913

Main: 908-686-4477 www.intellicom-analytics.com

Frank Stinson

[email protected]

An Overview of a Rapidly-Transforming Enterprise Communications Environment E-01: Setting the Stage...

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