Ncompass Uc Budgeting

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  • 1. Pricing and Budgeting for IP Telephony and UC
    Getting more “bang” from smaller budgets…
    N’compass Solutions, Inc.
    Douglas Carolus, MBA
    Director, Consulting Services & Operations
  • 2. Where is UC Going ?
    “Gartner has received some negative feedback on Cisco Unified Workspace Licensing (CUWL) from clients because of premium pricing (over standard IP telephony pricing), all-inclusive cluster licensing, and sales pressure to adopt now. Companies should ensure that they understand the full cost of ownership of CUWL and select it once the roadmap is in place…”
    • Gartner Corporate Telephony Magic Quadrant, August 2007-2008
    "Appeasement, said Winston Churchill, consists of being nice to a crocodile in the hope that he will eat you last. At the moment, the biggest crocodile in the world is Microsoft, and everybody is busy sucking up to it."
    • John Naughton, The London Observer
  • 3. 1996
    Functions in Software
    Functions in Hardware
    Evolution to Software –based Architecture
    ……the call processing function…has been transformed over the years. Most of the intelligence for call processing now lies in the software component of the call-control solution. R&D, entrepreneurial endeavor and innovation are also shifting to the software side. With creative energies expended to the software, the approach to pricing has logically evolved toward device licensing.” - Cisco UCM Licensing Pricing Model Q&A document.
  • 4. Current Unified Communications Market
    Mainstream - “Not yet”
    ~30% of enterprise-class companies have fully implemented unified messaging
    ~ 80% have deployed limited IP Telephony but only <20% have fully implemented IPT.
    Estimated UC Revenue:
    2007: $22.6B
    2010: $45.4B
    Source Datafrom Microsoft, In-Stat, and Wainhouse
  • 5. Cool Technology But Slow Adoption…Why?
    Technology & Capital Challenges
    Justification & Vendor Issues
    • 10 people = 10 definitions
    • 6. Products still evolving
    • 7. Capital & staff investment
    • 8. Deployment/support concerns
    • 9. Understanding TCO
    • 10. ROI elusive
    • 11. Vendor skills still maturing
    • 12. What “horse” do I bet on…?
  • 13. 6
    “Pricing complexity is a problem that pushes some companies to purchase rights to more software licenses than they might need…Software license management is often a fulltime job – and one that often generates more ill will than satisfaction with software vendors.”
    • Dwight Davis, Summit Strategies Analyst
  • Avaya
    Strategy: Bundling
    Approach: 9-tier “Transactional Framework” for most product families
    Type: “All Inclusive” bundle replaces Essential, Standard, and Advanced Editions
    New UC “All-in-One” Standard Edition includes six applications…
    • one-X Mobile
    • 14. one-X Portal
    • 15. one-X Communicator
    • 16. Microsoft OCS and IBM Sametime integration
    • 17. VPN remote phone licenses
    • 18. Extension-to-Cellular (EC500)
    UC Advanced EditionReplaced with Meeting Exchange + Web Conferencing
  • 19. Avaya (cont.)
    CM Standard Edition – All Inclusive is $50/user (list)
    CM Enterprise Edition – All Inclusive is “free” entitlement license
    “All Inclusive” Standard requires 3-year SS+U agreement (annual or pre-paid)
    More positive changes on their Modular Messaging platform…
    • 40% reduction in MM license fee in Nov 2008
    • 20. Message store on other mfg server does not increase license cost
    • 21. Every voice mail box is now speech-enabled
    • 22. NEW: Speech- to-Text module is incremental feature
  • 23. Avaya “Dollars and “Sense”
    IPT Example: Two types of Communication Manager 5.0 Licenses (500 users)
    • CM Standard (with DCS and QSIG networking) - $195 per user
    • 24. CM Enterprise (for “hub and spoke” designs and local survivability) - $295 per user
    User License based on Unique Designated Number, not user or device
    UC Example: 500 users with Enterprise CM, MM, and All Inclusive licenses:
  • 25. Avaya – Other Costs
    New Software Support includes 24x7 remote TAC access
    More flexible software and on-site technical support (finally)
    Support Cost Overview:
    • Software Support: Reduced from 15% to 7% net license cost
    • 26. Software Support + Upgrades: Reduced from 21% to 13% of net license cost
    Hardware/Gateway maintenance per port basis for $1.75/port per month (List)
  • 27. Cisco
    Strategy: Bundling
    Approach: Cisco Unified Workspace Licensing (CUWL) “bundles”
    Type: 3 Editions for IPT + UC solutions: Business, Standard, and Professional
    Client software, server software, and access rights included in each edition
    Other costs…
    • Plus - SmartNet required for hardware parts and replacements (optional)
    • 28. Plus - Essential Operate for software support (required for CUWL)
    • 29. Mandatory 3-Year Pre-Paid Software Subscription for Standard and Professional
    Old model still used: Server License + Device License Units (List $50 per unit)
    • Cisco IP or 3rd party SIP Phones use 1-6 DLU (ex. 7902 = 1 and 7985G = 6 units)
  • 30. Cisco Unified Workspace Licensing (CUWL) Evolution
    Pre-CM5.0 (<2006)
    Traditional Model
    Base Server Application +
    Device License Unit Pricing
    CM5.0 – UnBundled
    Returned to Traditional
    Model (90% of deals)
    Standalone UCM 6.0
    (FCS 7/2007)
    Every Server has a
    License (on publisher)
    Plus DLU Plus Hardware
    UCM 7.0
    New CUWL or
    “Old” DLU
    CM5.0 – Bundled
    Introduced 4 bundles
    with two tier structure:
    50-299 or 300-1500 users
    UCM Business Edition
    Targeted 50-500 users
    with bundled solution.
    Unified WL Introduced (August 2007)
    Workspace Licensing
    Bundled for enterprise
    Customers 100+
    “Device licenses for Cisco Unified CM remain separate from the price of the phone but the price of the device license component has increased starting with…Version 5.0”
    • Cisco UCM Licensing Pricing Model Q&A 2007
  • 31. Business includes UCM 7.0 with DLU for one device.
    Intended for <500 employees, < 20 sites.
    CUWL Comparisons
  • 32. Cisco “Dollars and “Sense”
    Business Edition: $315 per user (List)
    • 3-Year UC Software Subscription: $70/user (pre-paid)
    • 33. Essential Operate Services (Software support): $21/user per year
    • 34. UCSS and Essential Operate Required
    Standard Edition: $325 per user (List)
    • 3-Year UC Subscription Service (Software Releases): $70/user (pre-paid)
    • 35. Essential Operate Services (Software support): $21/user per year
    • 36. UCSS and Essential Operate Required
    Professional Edition: $425 per user (List)
    • 3-Year UC Subscription Service: $125/user (List)
    • 37. Essential Operate Services (software support): $27/user per year
    • 38. UCSS and Essential Operate Required
    • 39. 25 CUWL Licenses = 1 UCCExpress Agent or 1 MeetingPlace port
  • 40. Microsoft
    Strategy: Ala Carte or Bundling
    Approach: Server/Client Access Licenses (CAL)
    Type: Three Licensing components: Server + Application + Client
    “Rule of Thumb”
    • IM/Presence/Chat = OCS 2007 Standard CAL
    • 41. IM/Presence/Chat + Voice + Web/Audio Conferencing = OCS 2007 Enterprise CAL
    • 42. Unified Messaging = Exchange 2007 CAL
  • 43. Microsoft OCS R2 – What’s New
    Office Communications Server 2007 Release 2 now generally available
    Enterprise-class telephony still not ready for “prime time”
    OCS Release 3 (“Wave 14”) focuses on:
    • Survivable remotes
    • 44. Full telephony functionality/E911
    • 45. Audio conferencing
    OCS R3 planned for 2010 (same year Nortel ICA expires!)
  • 46. New OCS R2 (cont)
    Release 2 “Highlights”
    • No license fee increases from Release 1
    • 47. Customers with active R1 SW Assurance (SA) contracts entitled to R2 (free)
    • 48. External connector costs no longer required (was $1999 for OCS 2007)
    • 49. CAL still required for users who authenticate with Active Directory
    New CAL features with OCS R2
    • Group Chat in Standard CAL Suite
    • 50. Desktop sharing + telephony/conferencing features in Enterprise CAL Suite
  • 51. Microsoft “Dollars and “Sense”
    Unified Messaging (unified inbox) - $175
    • Purchase: $71 / user ($47 (SCAL) + $24 (ECAL)
    • 52. Software Assurance: $29 / user
    • 53. Office Outlook 2007 Client: $58 / user + $17 (SA)
    Unified Communications “Basic” (Unified Messaging + IM + Presence) - $231
    • Purchase: $93 / user ($71 UM + $22 (OCS Standard CAL)
    • 54. Software Assurance: $35 / user ($29 (Exchange SA) + $6 (OCS Standard SA)
    • 55. Office Outlook and Office Communicator Client: $79 / user + $24 (SA)
    Unified Communications “Advanced” (UC + Audio/Video Conf + IPT + App Sharing)- $352
    • Purchase: $190 / user ($71 UM + $119 (OCS Standard CAL and Enterprise CAL)
    • 56. $59 / user ($29 (UM SA) + $30 (OCS Standard and Enterprise SA)
    • 57. Office Outlook and Office Communicator Client: $79 / user + $24 (SA)
  • 58. Server CAL “Dollars and “Sense”
    “Ala Carte” Standalone Server License for Exchange Server 2007
    • Standard $488 with 1-year SA $122
    • 59. Enterprise $2791 with 1-year SA $698
    “Ala Carte” Standalone Server License for Office Communications Server 2007
    • Standard $488 with 1-year SA $122
    • 60. Enterprise $2791 with 1-year SA $698
    Key difference between Standard and Enterprise is that the Enterprise solution offers increased scalability plus redundancy. Functionally, the products are the same.
  • 61. Microsoft – In the Details
    Microsoft’s approach to the market - run thin, use Partner-led Selling
    Buy from Dealer -- Implementation VAR #1 – Service/Support VAR #2?
    Don’t expect to “negotiate” off VLP like a typical telephony deal
    Channel partner support fairly pricey $150 - $200/hour (MSFT ~300/hour)
    Nortel – Microsoft playbook has Nortel leading with Exchange 2007
  • 62. IP Telephony Pricing Guidelines
  • 63. IP Telephony Pricing Guidelines (cont.)
  • 64. Competitive Pricing for 4,000 station IPT/UM /CC Design
  • 65. UC and IP Telephony Procurement - Top 10 Questions
    Have you conducted an appropriate feasibility study?
    Is your entire network infrastructure tested and REALLY ready for the new enterprise applications? Power, cooling, cable, QoS, PoE, carrier services, data electronics etc…
    How will you define success and do you have clear, concise, and objective evaluation criteria to select the vendor(s)?
    Do you have the appropriate user groups represented on your project team and executive sponsorship to help support & defend your project?
    Do you have the right internal resources needed to select, implement and support the selected technologies?
  • 66. Top 10 Questions (cont.)
    Have you defined what you REALLY need implemented on “Day 1” and the existing assets you can leverage? Easy to bite off more than you can “chew”…
    Do you have a clear service and support plan for after system acceptance?
    Do you have sufficient growth and network refresh costs in your budget?
    Do you understand how your decision will impact your organization and your vendor relationship(s)?
    What is the best procurement and implementation methodology to support your strategy ? (HINT: Competitive procurement + POC/Pilot)
  • 67. Before You Buy Anything…
    Have you conducted a feasibility study to align your technology roadmap with your company’s strategic business plan?
    Feasibility Study = Analysis of a problem to determine if there is an effective solution. The operational, financial, and technical aspects of the analysis are critical and intended to address:
    What are acceptable alternatives to the current technologies?
    What are the costs, benefits, and risks associated with the viable alternatives?
    What is the best solution (current state, upgrade, migration, “rip & replace”)?
    Can the best solution be “built” and supported and if so, in what timeframe?
    The final objective is to answer the question: Should we implement the solution?
  • 68. Summary ---
    IP Telephony and Unified Communications software-based architectures require new understanding of vendor technology, licensing models, and pricing…
    Vendors have varying and evolving technology, software licensing, and costs…
    Customers will need to do their homework to understand these vendor models and how they impact the total cost of ownership…
    Begin with the end in mind; perform feasibility study, define your requirements, “Must Haves”, measures of success, and align with the business strategy…
    Competitive procurement process yields the best pricing and service support offers…it’s not easy but well worth the effort!
  • 69. THANK YOU and Questions…
    N’compass Solutions
    Douglas Carolus