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Transforming Enterprise Communications: Helping Customers Find the Value in Advanced Technologies

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Frost & Sullivan analysis on Helping Coustomers Find the Value in Advanced Technologies.

Frost & Sullivan analysis on Helping Coustomers Find the Value in Advanced Technologies.

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  • 1. Transforming Enterprise Communications Helping Customers Find the Value in Advanced Technologies Elka Popova, Program Director Melanie Turek, Principal Analyst Analyst Briefing June 2010
  • 2. Agenda Key Customer Pain Points and Channel Concerns From IP Telephony to UC: Where the Value Lies Hosted UC and SIP Trunking: Cloud Nirvana? Conclusions and Recommendations About Frost & Sullivan 2
  • 3. Key Customer Pain Points and Channel Concerns 3
  • 4. A Market Ripe for Infrastructure Consolidation and UC Penetration of IP Economy • Enterprises deploying IP •Companies forced to cut networks, “when” not “if” costs everywhere • Growth in gateways •Travel restricted & network mgmt tools •ROI means everything Growth of UC • Growth of remote, • Convergence at the virtual workers desktop • Focus on being • Move from siloed to an “green” integrated approach •Increasingly global • Value is in information business environment sharing, not hoarding Collaboration Business Changes 4
  • 5. Top Customer Pain Points Return on Investment Training Supporting Employee-Driven Next-Gen Technology Mobile Device Support Change Management 5
  • 6. Demand Analysis •Customers now including UC capabilities on their RFPs; in many cases, businesses are only upgrading a certain piece of their communications infrastructure (e.g. telephony). •Thechallenges related to the integration process currently seem to outweigh the perceived benefits of UC, limiting proactive demand for multi-vendor solutions. •Many businesses also continue to question the benefits of certain basic UC applications, including IM and videoconferencing. •Over the next 5 to 6 years, UC will penetrate the market mostly by vendors’ “push” strategies, and less so due to customer “pull.” Free UC clients, attractive bundling and low- cost or no-cost pilot programs will help users experience UC and its benefits. •UC adoption may remain limited to specific user groups (e.g. knowledge workers, marketing and sales people) for the next few years, until business models make it compelling for the average communications user to own a UC solution even if they are not using all of its capabilities and not benefiting as much as the early adopters. 6
  • 7. Unified Communications Market Evolution Enable Firm Foundation Collaboration • Scalability • Presence Hard Dollar Savings • Compliance • Chat • Reduce Communications • Security • Conferencing Costs • Business Continuity • Social Media • Reduce Facilities Costs • Flexibility • CEBP • Reduce Travel Costs • Open Standards • Green IT Source: Frost & Sullivan 7
  • 8. The Channel Plays a Key Role • The complexity of UC implementations, especially in multi-vendor environments, requires a significant vendor or channel partner implementation and integration expertise. • Intensifying competition and consolidation in maturing communications markets are also driving an increasing importance on the channel. • The nature of channel partnerships is changing as IT and telecom continue to converge with the shift to software-centric solutions, and with businesses increasingly virtualizing their data centers and, going forward, their communications infrastructures. • To succeed, VARs and SIs must be able to successfully deploy and manage converged technologies—and that requires new skill sets, education and training. 8
  • 9. Key Channel Objectives Most Im portant or Som ew hat Im portant Objective Q: What are your KEY OBJECTIVES over the next 12 to 18 months? Please rate each on a scale of: Stimulate demand through creative packaging/bundling and/or 76.9% Most Important, Somewhat Important and Least Important. Work more closely (in a more consultative fashion) w ith customers to 96.1% (Online survey, May 2010) Seek mergers or acquisitions to improve N=26 competitive positioning Align strategies and resources more closely w ith vendors' strategies and Objective Secure additional financing Become a hosted services provider or enhance existing hosted services 73.1% Become a managed services provider or enhance existing managed services 88.4% Ramp up services skills through hiring and/or training 76.9% Diversify vendor mix Expand product portfolio 0% 20% 40% 60% 80% 100% 120% Percentage of Respondents 9
  • 10. TECHNOLOGIES IMPACTING THE CHANNEL Q: Which technology trends do you TECHNOLOGIES TO HAVE THE LARGEST IMPACT expect to have the greatest impact on your business over the next 12 to 18 months? Social netw orking Rate the options below on a scale of: Large Impact, Medium Impact, Low Impact. Communications-enabled Business Processes (CEBP) (Online survey, May 2010) Cloud computing, SaaS and hosted N=26 Technology communications Also suggested: mobility Application virtualization Server virtualization Application integration and Unified Communications (UC) adoption 57.7% Netw ork convergence and migration to IP 61.5% telephony 0% 10% 20% 30% 40% 50% 60% 70% Percentage of Respondents 10
  • 11. From IP Telephony to UC: Where the Value Lies 11
  • 12. Convergence ROI: Evolution of the Business Case “SOFT” Competitive Advantage Integration with Business Processes Productivity Improvement Conferencing, Collaboration, Presence Reduced Cost of Ownership Operational Efficiency, Resource Optimization “HARD” Reduced Communication Costs Toll Bypass, Remote Access, … Tactical Strategic 12
  • 13. Market Engineering Measurements: Enterprise Telephony Platforms Enterprise Telephony Platform Market: Market Engineering Measurements (World), 2009 Measurement Name Measurement Trend Market age Mature Market Base-Year Revenues (2009) 5.7 Billion Decreasing Potential Revenues (2016) 6.2 Billion Increasing Base-Year Market Growth Rate (revenue) (24.9%) Decreasing Compound Annual Growth Rate (2009-2016) 1.1% Increasing Base-Year Unit Shipments (2009) 37.3 Million Increasing Potential Market Shipments (2016 market size) 47.1 Million Increasing Base-Year Market Growth Rate (Shipments) (20.4%) Increasing Compound Annual Growth Rate (2009-2016) 3.4% Increasing Market Concentration (% shipment of base year 40.0% Increasing market controlled by top three competitors) Degree of technical change High Note: All figures are rounded; the base year in 2009. Source: Frost & Sullivan 13
  • 14. Market Engineering Measurements: Enterprise IP Deskphones Enterprise Telephony Endpoint Market: Market Engineering Measurements for IP Desktop Phones (World), 2009 Measurement Name Measurement Trend Market age Mature Market Base-Year Revenues (2009) $1.89 Billion Increasing Potential Revenues (2016) $2.19 Billion Increasing Base-Year Market Growth Rate (revenue) (26.5%) Decreasing Compound Annual Growth Rate (2009-2016) 2.1% Increasing Average vendor revenue per user $150 Decreasing Base-Year Unit Shipment (2009) 12.6 Million Decreasing Potential Market Shipments (2016 market size) 24.5 Million Increasing Base-Year Market Growth Rate (Shipments) -22.5% Decreasing Compound Annual Growth Rate (2009-2016) 10.0% Increasing Market Concentration (% shipment of base-year 60.4% Decreasing market controlled by top three competitors) Degree of technical change Medium Note: All figures are rounded; the base year in 2009. Source: Frost & Sullivan 14
  • 15. Market Engineering Measurements: Enterprise Desktop Clients Enterprise Telephony Endpoint Market: Market Engineering Measurements for Desktop Clients (World), 2009 Measurement Name Measurement Trend Market age Growth Stage Base-Year Revenues (2009) $157.8 Million Decreasing Potential Revenues (2016) --- Base-Year Market Growth Rate (revenue) 64.2% Decreasing Compound Annual Growth Rate (2009-2016) --- Average vendor revenue per user $34.57 Decreasing Base-Year Unit Shipment (2009) 12.0 Million Decreasing Potential Market Shipments (2016 market size) 22.2 Million Increasing Base-Year Market Growth Rate (Shipments) 362.3% Decreasing Compound Annual Growth Rate (2009-2016) 9.1% Decreasing Market Concentration (% shipment of base-year 92.1 Decreasing market controlled by top three competitors) Degree of technical change High Note: All figures are rounded; the base year in 2009. Source: Frost & Sullivan 15
  • 16. Market Engineering Measurements: UC Unified Communications Market: Market Engineering Measurements (World), 2009 Measurement Name Measurement Trend Market age Growth UC Clients Shipped (2009) 15.5 million Increasing Potential UC Clients Shipped (2015) 27.7 million Increasing Users of Fully-integrated UC Solutions (2009) 2.1 million Increasing Potential Fully-integrated UC Solutions (2015) 49.5 million Increasing UC Client Shipments Base-year Growth Rate (2009) 197.6% Decreasing UC Client Shipments Forecast-period Growth Rate (CAGR) 10.2% Decreasing Competitors (active market competitors in base year) Approx. 20 Increasing Degree of technical change High Stable Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan 16
  • 17. Hosted UC and SIP Trunking: Cloud Nirvana? 17
  • 18. Driving Forces: A Dynamic IT Environment Multiple market forces are coming together to produce a communications market ripe for change Emergence of cloud Virtualization and other computing helps to enable enabling technologies become more compelling services part of value proposition Rapid convergence of IT and communications Consolidation occurs as Growth in VoIP and other IP-based IP telephony matures IP- communications Inflection Point for Hosted Services is Here Source: Frost & Sullivan 18
  • 19. Market Engineering Measurements: Hosted IP Telephony Hosted IP Telephony and UC Services Market: Market Engineering Measurements (North America), 2009 Measurement Name Measurement Trend Market age Growth Hosted IP Telephony Seats/Users (2009) 1.4 million Increasing Hosted IP Telephony Potential Seats/Users (2015) 7.8 million Increasing Hosted IP Telephony Revenues (2009) $700 million Increasing Hosted IP Telephony Potential Revenues (2015) $3.8 billion Increasing Hosted IP Telephony Base-year Revenue Growth Rate (2009) 33% Hosted IP Telephony Forecast-period Revenue Growth Rate (CAGR) 34% Average price per month/seat/user $50 Decreasing Price range per month/seat/user $20-$100 Decreasing Price sensitivity High Increasing Competitors (active market competitors in base year) Over 50 Decreasing Degree of competition 7 Increasing Degree of technical change High Increasing Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan 19
  • 20. Current State of the Hosted UC Market Hosted UC is riding the wave Up to 50,000 seats/users in 2009 A handful of service providers: Alteva, Apptix, CallTower, Cypress Communications, Engage Incorporated, LightEdge, USA.NET, Verizon Two backgrounds: • hosted/shared-tenant voice service providers • hosted email/business application providers Cisco, IBM, Microsoft, Siemens hosting or planning to host some services in the cloud themselves. Two business models: fully hosted and hybrid Also: private and public cloud 20
  • 21. Market Engineering Measurements: VoIP Access & SIP Trunking VoIP Access & SIP Trunking Services Market: Market Engineering Measurements (North America), 2009 Measurement Name Measurement Trend Market Age Early Growth Growing Base-Year (2009) Revenues $717.3 million Increasing Potential Revenues (2016 Market Size) $3.9 billion Increasing Base-Year (2009) Market Growth by Revenues 22.3% Increasing Forecast-Period (2009 – 2016 CAGR) Growth Rate by Revenues 27.3% Base-Year (2009) VoIP Access Service Users 3.8 million Growing Potential VoIP Access Service Users (2016) 46.4 million Growing Base-Year (2009) Growth Rate by Users 40.1% Growing Forecast-Period (2009 – 2016 CAGR) Growth Rate by Users 42.8% Share of Revenues - SMBs Vs. Enterprises 85.9% SMB : 14.1% Enterprise Decreasing Price Sensitivity High Increasing Number of Competitors in Base Year 100+ Increasing Degree of Competition 8 Increasing % of Market Controlled by Top 3 Competitors 56.3% Decreasing Note: All figures are rounded; the base year is 2009. Source: Frost & Sullivan 21
  • 22. SIP Trunking – The UC Context VoIP Access & SIP Trunking Services Market: Evolution of IP-based Communications in the Enterprise (North America), 2009 - Streamlined business processes - Greater productivity Adoption Curve - Multimodal communications Service-oriented Business Benefits across different devices Communications - Lower TCO - Automation - Network consolidation - Federation - Packetized voice Unified - Streamlined - Network QoS Communicationsbusiness - Long-distance cost processes savings - Enhanced reach - Lower TCO - Lower TCO Network Convergence SIP Trunking & SIP Trunking & Web Enabling Technology VOIP Multimode Technologies Networks Source: Frost & Sullivan 22
  • 23. Conclusions and Recommendations 23
  • 24. Sales Strategies and Recommendations Sell customers on IPT first, then upgrade them to other applications and fully integrated UC. Open systems are a must to allow customers to future-proof their investments. Involve more stakeholders than the usual IT or telecom buyers. Develop the necessary skills to implement UC and advise customers on best practices. Understand key business processes for your biggest customers or leading industries, and be prepared to help clients implement CEBP for maximum return. 24
  • 25. Thank You! Time for Q & A 25
  • 26. Next Steps Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com) 1-877-GoFrost (1-877-463-7678) Join us at our annual Growth, Innovation, and Leadership 2010: Silicone Valley - A Frost & Sullivan Global Congress on Corporate Growth, September 12-14 2010, Fairmont Hotel, San Jose, CA (www.gil-global.com) Register for the next Chairman’s Series on Growth: The CEO’s Growth Partnership: Developing a comprehensive action-based strategy to reinvigorate yourself (Tuesday, July 6) (http://www.frost.com/growth) Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep abreast of innovative growth opportunities (www.frost.com/news) 26
  • 27. Your Feedback is Important to Us What would you like to see from Frost & Sullivan? Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Please inform us by taking our survey. Other? 27
  • 28. Frost & Sullivan on Twitter Follow Frost & Sullivan on Twitter http://twitter.com/Frost_Sullivan 28
  • 29. For Additional Information Jake Wengroff Elka Popova Corporate Communications Program Director (210) 247-3806 Unified Communications jake.wengroff@frost.com (416) 792-0160 epopova@frost.com Melanie Turek Principal Analyst Unified Communications (970) 871-6110 mturek@frost.com 29