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The Heavenly Clouds

February 13, 2014

168443770Because of the increased efficiencies and boosted productivity the technology helps companies realize, unified communications tools are all the buzz these days in the business world. But many forward-thinking owners are taking the implementation of such technology a step further, choosing to adopt hosted unified communications solutions delivered through the cloud rather than deploy on-premises infrastructure.

This market — referred to as Unified Communications as-a-Service (UCaaS) — is expected to explode from $2.52 billion in 2013 to $7.62 billion by 2018, boasting an impressive 24.8 percent compound annual growth rate during that period, according to recent research.

Businesses are turning toward UCaaS for a variety of reasons, including:

  • Increased efficiency: After unified communications tools are integrated into a company’s day-to-day operations, business owners will notice substantially increased efficiency. The technology allows employees to communicate with one another in real time through a variety of mediums no matter where they happen to find themselves — so long as there is an Internet connection available.
  • Business continuity: Maintaining open lines of communication is essential when it comes to delivering best-in-class customer service. By leveraging UCaaS tools, companies benefit from the fact that their communications networks will remain online despite any disaster that they might encounter.
  • Cost savings: Because the service is delivered through the cloud by a third-party vendor that maintains the infrastructure and ensures the tools remain working properly, the IT staffs of businesses that utilize UCaaS solutions are free to invest their time and energy in overseeing other mission-critical aspects of a company’s technological infrastructure.

Another important factor to consider is the cost of purchasing and maintaining an on premises UC platform. On-premises UC platforms typically involve a relatively large, one-time upfront investment in software licenses. This investment entitles the buyer to a perpetual right to use the software. However, if the company wants access to bug fixes, help desk, and product updates, they will have to pay a recurring annual maintenance and support fee for on-premises that equates to roughly 18% to 22% of undiscounted license prices.

In addition, buyers often need to acquire the plumbing to support the system, including: hardware, infrastructure, and IT resources (or alternative hosting services). From a cash-flow perspective, on-premises UC platforms impose a relatively heavy short-term burden, with much lower ongoing financial pressures.

In contrast, UCaaS vendors charge a consistently smooth recurring subscription fee. This fee gives a subscriber the right to access the software. No rights are transferred, and the buyer never takes possession of any software. Subscription fees include costs relating to maintenance, support, and underlying IT infrastructure. In the short and mid-term, aggregate SaaS costs are likely to be lower than the aggregate on-premises costs over the same period.

In today’s difficult economic climate, chief executives are constantly seeking creative ways to do more with less while reducing unnecessary expenditures. And one way to do that is by employing UCaaS, as IT costs and capital expenditures are reduced while employees are treated to the benefits associated with unified communications tools.

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