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IP PBX and Cloud Communications
An Exclusive Executive Brief
provided by Broadview Networks
Elka Popova
Program Director,Unified Communications & Collaboration
3. 3
Staying Ahead of the Curve through Hosted IP PBX and Cloud Communications
All rights reserved © 2014 Frost & Sullivan
Introduction
IP telephony, or Internet protocol private branch exchange (IP PBX), is a foundational application on top of
which broader IP-based unified communications (UC) solutions are built. Continually evolving premises-based
telephony and UC systems provide an expanding set of features and functionality, but are also becoming more
costly and complex to deploy and manage. Cloud technologies and new subscription-based service delivery
models enable businesses to deploy advanced communications capabilities at a lower cost, reduced complexity
and with less risk. This article discusses how businesses can leverage the cloud delivery model to future-proof
their communications technology investments and stay ahead of the curve. The article examines the advantages
of hosted IP PBX solutions and identifies key customer scenarios where cloud communications deliver the
greatest value.
IP PBX and Unified Communications: Benefits and Challenges
Businesses increasingly acknowledge that advanced communications technologies can provide a competitive
advantage. Today’s business users leverage a growing arsenal of communications tools to stay connected with
co-workers,customers and partners. Long gone are the days when employees relied on voice and email alone to
collaborate on projects and complete their daily tasks.The move to converged IP networks and software-based
communications, and increasing competition among communications providers has led to the proliferation of
unified communications solutions.To address new and changing user requirements, businesses are deploying an
ever-growing range of capabilities from the UC tool set—including telephony,presence,instant messaging,audio,
video and Web conferencing, mobility, social networking and more—that help boost worker productivity, foster
information-sharing and improve business agility.
Proliferating communications tools can improve business performance, but can also create a more complex
IT environment and new challenges for IT staff. Rapid technology evolution and accelerating refresh cycles
are raising IT costs and risks associated with product obsolescence in premises-based implementations.
Another factor driving up IT costs is hiring and training skilled staff that can effectively manage disparate,
multi-vendor solutions.
Furthermore, advancements in consumer technologies and shifting user preferences are driving the influx
of consumer devices and applications into the workplace. Bring-your-own-device (BYOD) trends are adding
complexity to the communications environment while raising security and IT control concerns.
Implementing and managing complex unified communications solutions and integrating various consumer
technologies on the customer’s premises threatens the organization’s ability to focus on its core business,
compete effectively in the marketplace and be responsive to customers. Therefore, businesses are exploring
new deployment models that provide greater flexibility, reduce costs and future-proof technology investments.
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Exhibit 1 shows the challenges faced by IT staff.
Exhibit 1- IT Challenges
New regulatory requirements are driving IT (information technology) costs up
Managing multi-vendor solutions is increasingly costly and challenging
Supporting new business needs is driving our costs up
Our understanding of advanced UCC technologies is limited
We are not able to make effective and timely investments in IT
Our understanding of mobile technologies is limited
Our IT and business strategies are poorly aligned
Base: All respondents (n=1,028)
54%
51%
49%
42%
29%
29%
28%
Source: Frost & Sullivan
New Delivery Models Facilitate Advanced Communications
Solutions Adoption
As technology and business models evolve, deploying communications solutions in the cloud becomes even
more compelling. Hosted IP PBX and cloud UC solutions greatly reduce upfront costs and relieve the business
from routine system maintenance and management burdens. Furthermore, hosted solutions eliminate software
update, upgrade and maintenance costs that greatly increase the total cost of ownership (TCO) of premises-
based PBXs. Unlike premises-based communications systems, which can quickly become obsolescent, hosted IP
telephony and UCC solutions are always up to date at no additional charge to the customer.
Also important, intuitive Web portals and admin interfaces provide IT staff and end users with considerable
control and make hosted telephony systems easy to manage and use. By empowering end users, advanced
hosted solutions improve employee productivity and provide significant cost-savings to customer organizations
looking to streamline and delegate routine IT functions. Advanced disaster avoidance, business continuity and
multi-site functionality make hosted PBX and cloud UC solutions particularly compelling to forward-thinking
business decision-makers looking to reduce the risk of disruptive downtime as well as consolidate and more
effectively manage communications infrastructure across distributed sites.
Finally, cloud technologies enable businesses to gain faster, more economical access to advanced functionality
and a larger pool of technology skills. A cloud communications solution providing access to a broad set of
integrated features and capabilities such as telephony, messaging, presence, conferencing, and mobility presents
a viable option for businesses of any size and industry seeking a competitive advantage.
5. 5
Staying Ahead of the Curve through Hosted IP PBX and Cloud Communications
All rights reserved © 2014 Frost & Sullivan
Hosted IP PBX and cloud UC solutions address key business pain points, as follows:
Reduce and streamline costs:
• Reduce upfront capital investment for associated hardware and software
• Reduce service fees for initial configuration and installation
• Replace variable premises-based infrastructure and software maintenance and management costs with
predictable monthly service fees
• Eliminate the expense and hassle of integrating multiple, disparate technologies in a premises-based
UC solution
• Enable flexible and economical capacity adjustments
• Provide cost-effective business continuity/disaster recovery through redundant connections and mobile
device integration
• Provide security patches and updates as part of monthly service fees
Reduce risk and improve business agility:
• Free up internal resources for more strategic tasks
• Provide faster, more economical access to technology updates and new features
• Reduce the risk of technology obsolescence and sunk costs
• Provide access to superior technology expertise
• Deliver telephony and UC features based on user needs independent of their physical location or
underlying infrastructure
• Allow the organization to focus on core business activities
Overall, hosted IP PBX and cloud communications impact a business’s ability to grow revenues and increase
profit margins. Improved performance metrics drive a competitive advantage and help businesses stay ahead of
the curve.
6. 6
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Exhibit 2 shows the perceived benefits of hosted/cloud communications solutions.
Exhibit 2-Hosted/Cloud Communications Benefits
Allow us to support our mobile workforce
Can provide us with faster access to advanced features/capabilities
Can supplement our limited in-house IT/ telecom resources
Can provide us with more economical access to advanced features and capabilities
Can help us re-assign in-house IT/telecom staff to more strategic tasks
Provide a lower total cost of ownership than premises-based solutions
Our company trusts 'the cloud' to host our communications solutions
Provide greater flexibility at times of rapid growth or downsizing
Eliminate the hassle of integrating multi-vendor products and solutions
Help us to integrate multiple, geographically dispersed locations economically
Better fit our budget which favors OPEX to CAPEX
The cost of hosted communications is more predictable
Base: All respondents (n=445)
77%
74%
72%
72%
70%
67%
66%
66%
66%
65%
64%
61%
Source: Frost & Sullivan
The Best Fit: Who Can Benefit from Hosted IP PBX and Cloud
Communications?
Small and Medium-Size Businesses (SMB)
Limited access to investment capital and lack of internal IT expertise are key challenges traditionally faced by
small and medium-size businesses when implementing advanced technologies. Cloud communications effectively
remove the historical cost barrier that prevented SMBs from leveraging next-generation telephony and unified
communications to improve internal and external collaboration. By outsourcing the operational complexity to
trusted providers, cloud solutions enable SMBs to focus on their core business activities, thus gaining resource
efficiencies and greater agility.
Businesses with Shifting Capacity Requirements
Hosted IP PBX and cloud UC solutions allow businesses experiencing rapid or uncertain growth to easily
and cost-effectively adjust capacity based on fluctuating demand. By adopting on-demand cloud solutions,
businesses can quickly enable new users and locations. During tough economic times, they can reduce capacity
at any site without the risk of sunk costs in hardware or perpetual user licenses. Similarly, hosted IP PBX and
cloud communications more flexibly scale to support temporary teams, as well as seasonal peaks and lows in
communications capacity utilization.
7. 7
Staying Ahead of the Curve through Hosted IP PBX and Cloud Communications
All rights reserved © 2014 Frost & Sullivan
Distributed Organizations and Mobile Workers
Hosted IP PBX and cloud UC solutions enable distributed organizations of any size, including very large ones,
to consolidate infrastructure and thus reduce technology deployment and management costs. Comprehensive
cloud-based telephony and UC solutions eliminate the expense and hassle of integrating disparate technologies
on the premises, while allowing businesses to streamline vendor relationships and simplify their technology
evolution roadmaps.
By moving communications solutions to the cloud, organizations can more cost-effectively support small
branches, as well as remote and mobile employees. Cloud technologies allow businesses to deliver different
capabilities based on user needs rather than user physical location or underlying infrastructure.
Furthermore, hosted IP communications solutions enable businesses to reduce the number of access lines
required to connect different sites to the service provider network and the public switched telephone network
(PSTN). Multi-protocol label switching (MPLS) capabilities, frequently bundled with the hosted IP telephony
solution at little or no extra charge, ensure greater service quality and reliability.
Exhibit 3 shows the potential use cases for hosted IP PBX and cloud UC.
Exhibit 3-The Best Fit
No Size
Restrictions:
from SMB to
Enterprise
Mobile &
Office
Workforce
Stay Connected
Distributed
Organization:
Teleworkers
and Remote
Branches
Temporary
Workgroups
& Seasonal
Capacity Peaks
Rapid or
Uncertain
Growth
Need to Focus
on Core
Competencies
and Improve
Business Agility
Source: Frost & Sullivan
Conclusion
Demand for hosted IP PBX and cloud communications is growing as businesses look for more flexible and
cost-effective deployment models for their unified communications solutions. Today, businesses of all sizes
and industries use the cloud service delivery model to gain greater benefits from their communications
investments. Hosted IP telephony and cloud UC services boost company productivity and profitability, thus
helping businesses become more competitive. Frost & Sullivan contends that hosted IP PBX and cloud UC
represent the most viable solution for businesses such as SMBs, distributed enterprises, and organizations
with shifting capacity requirements.
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