As the market turns around... a hot new
communications service market emerges
How can communications as a service (CaaS) h...
Table of contents
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
Executive summary                                          and recovery as a service, and multimedia conferencing
An excellent opportunity for                                 At the same time, IT leaders and managers have
For instance, SMBs in general like their technology        of CaaS offerings and not bog marketing messages
bundled, and H...
Figure 1: Cost savings,                                                     IP contact center              Self-service IV...
Unified Communications as a Service
                                                 Opportunity size in 2014: $2.1 billio...
conduct trials previously defined by the service provider
Figure 3: The HP Aggregation Platform for SaaS is an integral pa...
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As the market turns around...a hot new communications service ...

  1. 1. As the market turns around... a hot new communications service market emerges How can communications as a service (CaaS) help you meet your small and medium business customers’ need for cost-effective and on-demand services? Business white paper
  2. 2. Table of contents Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 An excellent opportunity for service providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The time is ripe for CaaS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 What service providers stand to gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 How to enter the market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The market potential of the HP CaaS program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 IP Contact Center as a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Self-service IVR as a Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Unified Communications as a Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Video Surveillance as a Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 The HP Communications as a Service program: A single, convenient platform, proven solutions, and an established process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 For more information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
  3. 3. Executive summary and recovery as a service, and multimedia conferencing as a service. The study forecasts a total market of at Communications as a service (CaaS) is a hot new least $12.3 billion by 2014, with a strong compound market that promises to grow quickly. As the name annual growth rate (CAGR) of 31%. implies, CaaS is similar in nature to software as a service (SaaS), which is an increasingly popular method Findings of the study, which spanned organizational for technology organizations to acquire software size and industry as well as geography, include these resources. In CaaS, communications technology is salient facts: located in a data center of a communications service • Between 47% and 55% of the SMBs surveyed want provider, and is owned and managed by the service the solutions mentioned above. provider as a multi-tenant infrastructure. The service • SMBs see these CaaS services as a way to save provider offers this technology to customers on a money, be more agile in adopting technology, pay-per-minute or pay-per-subscription basis, giving and spend flexibly on technology for fluctuating them flexibility in acquiring business services and at business needs. the same time reducing costs. • Nearly 90% of the SMBs who expressed an Small and medium businesses (SMBs) that need interest in these CaaS services want multiple and enterprise-class communications services but lack bundled solutions. the resources that large enterprises have to acquire • Most SMBs see service providers as logical partners technology and operate it in house already do to deliver those solutions. business with service providers. The HP CaaS program can help expand that business. HP believes that CaaS promises to be a fast-growing market that offers an excellent opportunity for service A 2009 Forrester Consulting study of 900 SMBs, providers to expand their business with SMBs and commissioned by HP and conducted in nine countries create stable sources of new revenue. Accordingly, HP in the Americas, Europe, and Asia-Pacific, estimates the proposes a CaaS program that brings to bear years of potential market for six types of CaaS services, including HP expertise in both technology and telecommunications self-service interactive voice response (IVR) as a service, on highly reliable and scalable solutions to help service IP contact center as a service, unified communications providers enter and sustain a presence in this market. as a service, video surveillance as a service, PC back-up 3
  4. 4. An excellent opportunity for At the same time, IT leaders and managers have become more receptive to the concept of managed service providers services to supplement in-house operations cost-effectively. While the Forrester Consulting study indicates that In the wake of the downturn, today’s economic most SMBs are handling the above services in house, uncertainty has been particularly rough for SMBs. In between 48% and 58%, depending on the type of the past, technology spending in SMBs was more or service, display an interest in as-a-service alternatives. less evenly distributed across hardware, software, The SMBs surveyed cited three compelling advantages and services expenditures, but now, as they struggle in CaaS: to recover from the downturn, we can expect to see • Cost savings—by limiting CAPEX outlay and a higher demand for services as SMBs catch up matching payments to use technically with their enterprise counterparts. • Speed and flexibility in adopting technology—to For service providers, CaaS offers a way to capitalize help increase revenue and gain competitive advantage on a seemingly contradictory need to deliver • Better business agility—for adjusting levels of service innovative technology services and at the same time (and the associated levels of spending) to fluctuating operate within tight budgets. In particular, SMBs business demand by dynamically expanding and are a potentially lucrative market for managed contracting technology usage on a pay-per-minute communications services. Currently, the demand is or pay-per-subscription basis accelerating and as things improve, this demand will continue to grow. Vendors who catch the wave at its The time is ripe for CaaS peak with viable offerings can lead in this market. HP sees several trends converging to make CaaS can be a way for service providers to monetize telecommunications service providers take a close key network and communication assets—in a recurring look at CaaS offerings. and operationally efficient fashion—to serve the SMB market. It enables the service providers to offer The increased pace at which new technologies are a number of attractive advantages—on-demand bursting on the business scene is the most significant delivery, pay-per-minute and pay-per-subscription of these factors. New technologies create new pricing, flexibility, and rapid deployment of new products and services at a rate unimagined only a services—and greatly reduced infrastructure, staffing, few years ago, and successful businesses must ride and training costs. this wave of innovation. As this happens, the investments businesses make What service providers stand to gain in technology infrastructure and technical knowledge Service providers acknowledge the business value of have a shorter lifespan. At the same time, the cost CaaS. As one service provider who participated in the and complexity of the infrastructure increases, and Forrester Consulting study put it, “Economic crisis or not, the businesses run the risk of investing substantially customers want to know that we can help them with in technology and training that will be outmoded in productivity. Services will be our future, and CaaS offers months or even weeks—or, alternatively, giving up new revenue models that are very attractive to us.” competitive advantage and market share. According to HP, service providers stand to earn Beginning in 2008, investing in technology was fees for both the services provided and the network complicated by a sharply declining economy. And traffic end users generate. And more importantly, businesses of all sorts became reluctant to spend CaaS offerings that leverage existing service provider capital on costly technology—especially technology strengths like network infrastructure, IP telephony, and with a short shelf life. self-service IVR are a way to increase market share in a highly competitive telecommunications market, In response to these factors, the role and culture of IT where wireline revenues are declining. CaaS offers organizations has begun to change. The traditional IT an extensive, stable source of revenue, but to harness role of managing infrastructure to “keep the lights on” the opportunity, providers need to apply their deep is giving way to a perception of the IT organization as knowledge of SMBs to the CaaS market. According a key business driver, tasked with helping the business to the interviewee, “Some biases with SMBs still exist. bring in revenue and gain competitive advantage. You need to be seen as a trusted advisor with them.” 4
  5. 5. For instance, SMBs in general like their technology of CaaS offerings and not bog marketing messages bundled, and HP believes this will be no different down with potentially unfamiliar terms like “cloud” or as they approach CaaS. One way to attract and “as a service.” retain SMB customers is to offer technology/network Knowing who the competition is can also help service service bundles, giving the SMB a one-stop shop providers to position themselves competitively. The for services. Forrester Consulting study shows that one-third to Once a pipeline of SMB business is open, service more than one half of SMBs would buy these services providers can offer attractive bundles, deliver services from telecom providers. HP agrees that SMBs will expertise as a broker of CaaS, and offer flexible consider service providers, and the ability to bundle payment models such as pay-per-minute and CaaS offerings may give service providers an pay-per-subscription, and in return get: advantage over dedicated as-a-service providers. • New and expanding revenue streams The market potential of the • An increasing share of the capital SMBs expend on network and technology spending HP CaaS program • Rich returns on their own investments in platforms The HP CaaS program includes two HP solutions, HP and solutions Self-Service IVR solution and HP Video Surveillance solution, and two partner solutions, IP Contact Center How to enter the market and Unified Communications, all pre-integrated with the HP Aggregation Platform for SaaS. The HP How much potential does the market have? The Aggregation Platform for SaaS provides the foundation Forrester Consulting study estimates an “as a service” for additional HP and third-party SaaS solutions. market for self-service IVR, IP contact center, unified communications, and video surveillance of at least According to HP, these four services offer distinct $6.2 billion by 2014, with a strong CAGR of 29%. value propositions for both service providers and their SMB customers. According to “Navigating Through the Volatility and Complexity of the Tech Industry Ecosystem,”1 These offerings help service providers to: “Historically, the technology industry has moved • Attract and retain business by giving SMBs a one-stop in waves of technology-driven innovation and shop for IT/telecommunications service bundles consolidation. During the past 50 years, these waves have involved eight to 10 years of innovation • Provide flexibility in acquiring services based on and rapid technology adoption, followed by eight to a SaaS model 10 years of technology refinement and digestion.” If • Offer convergence of fixed and mobile this pattern continues, we are on the cusp of the next communications heavy investment in technology, which HP believes will For their part, SMBs get: involve deep investments in technology that will span all layers of the technical stack. Amid the complexity • Quicker access to state-of-the-art technology services that is bound to accompany these trends, “everything • Faster time to production as a service” will be a key way to achieve agility, • Lower setup costs by avoiding CAPEX investments scale, and cost-efficiency. and a more predictable OPEX But as one study participant pointed out, “The • Better focus on core business functions instead of biggest competitor in the SMB space is complacency.” technology and communications management According to HP, it is the service provider’s • The ability to scale up as business needs change responsibility to give the SMB clear and compelling reasons to invest. While demand exists for CaaS and • More reliable access to business applications and more dynamic payment models, many SMBs are less data, anytime, anywhere familiar than their large enterprise counterparts with the terminology of “as a service.” This means service 1 Forrester Research Inc., January 9, 2009 providers need to stay focused on the business benefits 5
  6. 6. Figure 1: Cost savings, IP contact center Self-service IVR Unified communications Video surveillance technical agility, and flexible as a Service as a Service as a Service as a Service consumption rank high as potential reasons for SMBs We believe it will save us money 55% 55% 52% 47% to adopt solutions in an as-a-service model We want the ability to keep 44% 44% 43% 45% up with technology changes more quickly We want the ability to change 36% 36% 30% 32% the amount of service we use to closely match our level of business activity We want to free up our IT staff for 19% 22% 27% 20% more strategic issues Base: Decision-makers in the Americas, Asia, and EMEA We want to move this technology 12% 15% 17% 22% from our current configuration Source: Forrester Consulting, and like the reduced CAPEX custom survey for HP CaaS IP Contact Center as a Service Opportunity size in 2014: $1.4 billion USD Compound annual growth rate: 27% Interest in purchasing CaaS: 58% IP Contact Center as a Service utilizes a virtual contact center Use case: A travel agency with 250 employees dedicates more at the service provider’s location, connected to the customer’s than half of them to answering service requests coming in by premises through IP. It delivers multi-channel capabilities, including email, telephone, and web chat. The director of technology and telephone, email, and web chat and routes customer contacts to two other employees coordinate communication channels. Since service agents staffed by the customer. SMBs are less likely to need the small technology staff can’t manage all the necessary changes premises-based and fully staffed contact centers when compared to and updates, the director uses the services of a local value-added large enterprises, and IP telephony makes it easier to use part-time reseller (VAR). In this situation, IP Contact Center as a service is and at-home agents to assign contacts to knowledge workers with an attractive option. For a flat monthly fee, the technology director other core responsibilities. can maintain his IP contact center without tying up the management and technical attention of his staff. The finance director can trade a varying stream of ongoing capital investments and expense payments for a predictable stream of monthly expenses. Self-service IVR as a Service Opportunity size in 2014: $1.4 billion USD Compound annual growth rate: 23% Interest in purchasing CaaS: 57% Using a secure multi-tenancy IVR platform, a service provider can Use case: A 21-person department within a small city government enable its customers’ customers to perform transactions such as handles citizens’ calls on a wide range of issues—with a shrinking information requests, account updates, or purchases via telephone. budget. Many issues can be handled satisfactorily without direct This enables SMBs to extend business hours, handle more contact with a staff member, so self-service IVR is a good option. transactions, and in general compete against larger enterprises that Managing an IVR system in-house is out of the question for budget have more resources. Self-service IVR as a service can help SMBs reasons, but self-service IVR as a service is definitely viable. Without gain the benefits of self-service IVR while paying for just enough going to the budget committee for approval of capital expenses, service to handle small or fluctuating call volumes. the department can acquire a service that releases highly paid employees from phone duty and makes it possible to quickly and easily update scripts to adjust for changing conditions like road and school closures. And the operating costs are matched to actual call volumes. 6
  7. 7. Unified Communications as a Service Opportunity size in 2014: $2.1 billion USD Compound annual growth rate: 27% Interest in purchasing CaaS: 48% Unified communications is a relatively new offering that can help Use case: A 250-person construction firm with dozens of projects businesses save money and operate more efficiently. It enables in various stages of completion is finding the process it uses to workers to see their colleagues’ status and allows them to see and enable new work sites inefficient and costly. The new sites need the select the communications paths available for contacting them. It ability to communicate in real time to coordinate material deliveries, lets users move seamlessly between communications modes and change orders, manage work-crew availability, and schedule work channels, allows them to create contact lists, gives them a combined inspections. Unified Communications as a Service can reduce interface for voice, instant messaging, and video calls via PC or the management headache by providing a scalable and efficient phone, and enables administrators to track the use of tools and way—with a mobile interface—for all sites to exchange calls, email, media. Unified Communications as a Service promises to be the and instant messages. It can also enable the company to match easiest way for SMBs with limited technical capabilities to gain expenses with business needs. the advantages. Video Surveillance as a Service Opportunity size in 2014: $1.2 billion USD Compound annual growth rate: 47% Interest in purchasing CaaS: 41% Many SMBs have security and business requirements that can be Use case: A small utility company generates hydroelectric power met by video surveillance. Uses include monitoring customers at the from a series of “micro-dams” and distributes it to local homes and register, observing their movement and interaction with displays and businesses. For years, the company has protected the dams and merchandise in retail space, and monitoring employee behavior to other facilities by employing security guards. The company is aware enable customer satisfaction. In Video Surveillance as a Service, a that this security approach is both ineffective and expensive, and defined set of cameras and a user interface are on the customer’s decides to deploy cameras—supplemented by a staff of two to premises, but camera management and alerting capabilities are respond to events—to monitor power lines, dams, and buildings. managed by the service provider for better reliability and availability But the cost has to be lower than the cost of the current staff and the than a solution managed completely in-house can supply. vehicles they use, so the company turns to Video Surveillance as a Service to deploy video surveillance without capital outlay, improve the effectiveness of security, and lower monthly personnel costs. The HP Communications as a Service Figure 2: HP CaaS program program: A single, convenient platform, proven solutions, and an established process Future evolution As shown in Figure 2, HP Communications & Media United Communications Solutions (CMS) offers a set of HP and partner Other SaaS offerings solutions for service providers. As a center piece of (SPs, HP, Third Party) this program, we can deliver an aggregation platform Video Surveillance IP Contact Center and a suite of HP and partner solutions that enable Self-service IVR service providers to offer the CaaS solutions SMBs want, reliably and cost-effectively. The HP Aggregation Platform for SaaS also provides a means for service providers to extend their offerings to provide infrastructure as a service, IT management as a service, business applications as a services and custom offerings. HP Aggregation Platform for SaaS HP Aggregation Platform for SaaS, a key component of HP CaaS, is based on a proven methodology for Service Delivery Platform enabling and delivering IT and communications SaaS services with four key phases: service ingestion, product offering, product consumption, and operations and business support. (See Figure 3.) 7
  8. 8. conduct trials previously defined by the service provider Figure 3: The HP Aggregation Platform for SaaS is an integral part of the HP CaaS program. and then subscribe to services. SMB customers can use the customer portal to manage their employees and subscriptions, generate reports, and access subscribed 1 2 services seamlessly. SaaS service Definition of management product offers Operations and business support systems: The SaaS and integration to be proposed services to customers aggregation platform interfaces with all necessary Service Product operator OSS/BSS systems for SaaS service ingestion offering management, including fault and performance Service management, and business reporting. Charging Telco-enabled introduction events are sent to the existing billing mediation layer SaaS Operations, Product process for customers. business consumption Based on proven software products, documented 4 support 3 service methodologies, and architectural frameworks, system Operations, Sell product offers HP CMS has focused investment and expertise in billing, settlement to customers through functions a web portal solution domains to help customers address specific imperatives—including the emergence of cloud computing technologies and the inherent revenue opportunities enabled by the emerging infrastructure. Service ingestion: The first phase is to select services The SaaS services can be deployed in a service and integrate them into the HP Aggregation Platform provider’s data center and integrated with third-party for SaaS. This enables service provisioning, billing, services to further enhance the potential of CaaS management, and identity management within the offerings and provide flexibility and customization to service provider’s environment. service providers. Product offering: Using an efficient web interface, With years of expertise in both technology and marketing and product management organizations can telecommunications, a highly reliable, scalable CaaS create products and bundles from services registered in platform, and a major business unit—Communications the HP Aggregation Platform for SaaS. They can define & Media Solutions—that exclusively serves the service service plans and pricing models, and display product provider market, HP is a world-class partner for service marketing information on their SaaS marketplace portal, providers moving into the CaaS for SMB market. We where SMB customers can discover SaaS products and understand the need to be both a low-cost provider and bundles, run trials, subscribe to services, and consume a high-value seller, and we can act as a trusted provider them. End-to-end product testing occurs at this phase, to as well as a vendor. make sure that ordering, delivery, billing, and service management function properly. And once a product is certified, marketing can approve it for placement on For more information the marketplace portal. Because new products can be To learn how you can tap new sources of revenue published without developing software, new services by offering services on demand to SMB customers, can be delivered more quickly. contact your HP representative or HP Partner today, or learn more about HP Communications as a Service at: Product consumption: Customers can browse the SaaS marketplace portal to explore service provider offerings. If products are of interest, customers can Get connected Get the insider view on tech trends, alerts and HP solutions for better business outcomes Technology for better business outcomes To learn more, visit © Copyright 2009 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein. 4AA3-0064ENW, November 2009