Ncompass Uc Budgeting


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Ncompass Uc Budgeting

  1. 1. Pricing and Budgeting for IP Telephony and UC<br />Getting more “bang” from smaller budgets…<br />N’compass Solutions, Inc.<br />Douglas Carolus, MBA<br />Director, Consulting Services & Operations<br />1<br />
  2. 2. Where is UC Going ?<br />“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…”<br /><ul><li>Gartner Corporate Telephony Magic Quadrant, August 2007-2008</li></ul>&quot;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.&quot; <br /><ul><li>John Naughton, The London Observer</li></ul>2<br />
  3. 3. 1996<br />2003<br />2009<br />Functions in Software<br />Functions in Hardware<br />Evolution to Software –based Architecture<br />……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.<br />3<br />
  4. 4. Current Unified Communications Market<br />Mainstream - “Not yet”<br />~30% of enterprise-class companies have fully implemented unified messaging<br />~ 80% have deployed limited IP Telephony but only &lt;20% have fully implemented IPT. <br />Estimated UC Revenue:<br />2007: $22.6B<br />2010: $45.4B<br />Source Datafrom Microsoft, In-Stat, and Wainhouse<br />4<br />
  5. 5. Cool Technology But Slow Adoption…Why?<br />Technology & Capital Challenges <br />Justification & Vendor Issues<br /><ul><li>10 people = 10 definitions
  6. 6. Products still evolving
  7. 7. Capital & staff investment
  8. 8. Deployment/support concerns
  9. 9. Understanding TCO
  10. 10. ROI elusive
  11. 11. Vendor skills still maturing
  12. 12. What “horse” do I bet on…?</li></ul>5<br />
  13. 13. 6<br />“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.”<br /><ul><li> Dwight Davis, Summit Strategies Analyst</li></li></ul><li>Avaya <br />Strategy: Bundling<br />Approach: 9-tier “Transactional Framework” for most product families<br /> Type: “All Inclusive” bundle replaces Essential, Standard, and Advanced Editions<br />New UC “All-in-One” Standard Edition includes six applications…<br /><ul><li>one-X Mobile
  14. 14. one-X Portal
  15. 15. one-X Communicator
  16. 16. Microsoft OCS and IBM Sametime integration
  17. 17. VPN remote phone licenses
  18. 18. Extension-to-Cellular (EC500) </li></ul>UC Advanced EditionReplaced with Meeting Exchange + Web Conferencing<br />7<br />
  19. 19. Avaya (cont.) <br />CM Standard Edition – All Inclusive is $50/user (list)<br />CM Enterprise Edition – All Inclusive is “free” entitlement license <br />“All Inclusive” Standard requires 3-year SS+U agreement (annual or pre-paid)<br />More positive changes on their Modular Messaging platform…<br /><ul><li>40% reduction in MM license fee in Nov 2008
  20. 20. Message store on other mfg server does not increase license cost
  21. 21. Every voice mail box is now speech-enabled
  22. 22. NEW: Speech- to-Text module is incremental feature </li></ul>8<br />
  23. 23. Avaya “Dollars and “Sense”<br />IPT Example: Two types of Communication Manager 5.0 Licenses (500 users)<br /><ul><li>CM Standard (with DCS and QSIG networking) - $195 per user
  24. 24. CM Enterprise (for “hub and spoke” designs and local survivability) - $295 per user </li></ul>User License based on Unique Designated Number, not user or device <br />UC Example: 500 users with Enterprise CM, MM, and All Inclusive licenses:<br />9<br />
  25. 25. Avaya – Other Costs<br />New Software Support includes 24x7 remote TAC access<br />More flexible software and on-site technical support (finally)<br />Support Cost Overview: <br /><ul><li>Software Support: Reduced from 15% to 7% net license cost
  26. 26. Software Support + Upgrades: Reduced from 21% to 13% of net license cost </li></ul>Hardware/Gateway maintenance per port basis for $1.75/port per month (List)<br />10<br />
  27. 27. Cisco<br />Strategy: Bundling<br />Approach: Cisco Unified Workspace Licensing (CUWL) “bundles”<br />Type: 3 Editions for IPT + UC solutions: Business, Standard, and Professional<br />Client software, server software, and access rights included in each edition<br />Other costs…<br /><ul><li>Plus - SmartNet required for hardware parts and replacements (optional)
  28. 28. Plus - Essential Operate for software support (required for CUWL)
  29. 29. Mandatory 3-Year Pre-Paid Software Subscription for Standard and Professional</li></ul>Old model still used: Server License + Device License Units (List $50 per unit)<br /><ul><li>Cisco IP or 3rd party SIP Phones use 1-6 DLU (ex. 7902 = 1 and 7985G = 6 units) </li></ul>11<br />
  30. 30. Cisco Unified Workspace Licensing (CUWL) Evolution<br />Pre-CM5.0 (&lt;2006)<br />Traditional Model<br />Base Server Application +<br />Device License Unit Pricing<br />CM5.0 – UnBundled<br />(2007)<br />Returned to Traditional<br />Model (90% of deals)<br />Standalone UCM 6.0<br />(FCS 7/2007)<br />Every Server has a <br />License (on publisher)<br />Plus DLU Plus Hardware<br />UCM 7.0<br />(2008)<br />New CUWL or <br /> “Old” DLU<br />Today<br />CM5.0 – Bundled <br />(2007)<br />Introduced 4 bundles<br />with two tier structure:<br />50-299 or 300-1500 users<br />UCM Business Edition<br />Targeted 50-500 users<br />with bundled solution.<br />Unified WL Introduced (August 2007)<br />Workspace Licensing<br />Bundled for enterprise<br />Customers 100+<br />“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” <br /><ul><li>Cisco UCM Licensing Pricing Model Q&A 2007</li></ul>12<br />
  31. 31. Business includes UCM 7.0 with DLU for one device. <br />Intended for &lt;500 employees, &lt; 20 sites.<br />CUWL Comparisons<br />13<br />
  32. 32. Cisco “Dollars and “Sense”<br />Business Edition: $315 per user (List)<br /><ul><li> 3-Year UC Software Subscription: $70/user (pre-paid)
  33. 33. Essential Operate Services (Software support): $21/user per year
  34. 34. UCSS and Essential Operate Required</li></ul>Standard Edition: $325 per user (List)<br /><ul><li> 3-Year UC Subscription Service (Software Releases): $70/user (pre-paid)
  35. 35. Essential Operate Services (Software support): $21/user per year
  36. 36. UCSS and Essential Operate Required</li></ul>Professional Edition: $425 per user (List)<br /><ul><li> 3-Year UC Subscription Service: $125/user (List)
  37. 37. Essential Operate Services (software support): $27/user per year
  38. 38. UCSS and Essential Operate Required
  39. 39. 25 CUWL Licenses = 1 UCCExpress Agent or 1 MeetingPlace port</li></ul>14<br />
  40. 40. Microsoft <br />Strategy: Ala Carte or Bundling <br />Approach: Server/Client Access Licenses (CAL) <br /> Type: Three Licensing components: Server + Application + Client <br />“Rule of Thumb”<br /><ul><li>IM/Presence/Chat = OCS 2007 Standard CAL
  41. 41. IM/Presence/Chat + Voice + Web/Audio Conferencing = OCS 2007 Enterprise CAL
  42. 42. Unified Messaging = Exchange 2007 CAL</li></ul>15<br />
  43. 43. Microsoft OCS R2 – What’s New<br />Office Communications Server 2007 Release 2 now generally available<br />Enterprise-class telephony still not ready for “prime time”<br />OCS Release 3 (“Wave 14”) focuses on:<br /><ul><li>Survivable remotes
  44. 44. Full telephony functionality/E911
  45. 45. Audio conferencing</li></ul>OCS R3 planned for 2010 (same year Nortel ICA expires!)<br />16<br />
  46. 46. New OCS R2 (cont)<br />Release 2 “Highlights”<br /><ul><li>No license fee increases from Release 1
  47. 47. Customers with active R1 SW Assurance (SA) contracts entitled to R2 (free)
  48. 48. External connector costs no longer required (was $1999 for OCS 2007)
  49. 49. CAL still required for users who authenticate with Active Directory</li></ul>New CAL features with OCS R2<br /><ul><li>Group Chat in Standard CAL Suite
  50. 50. Desktop sharing + telephony/conferencing features in Enterprise CAL Suite</li></ul>17<br />
  51. 51. Microsoft “Dollars and “Sense”<br />Unified Messaging (unified inbox) - $175<br /><ul><li>Purchase: $71 / user ($47 (SCAL) + $24 (ECAL)
  52. 52. Software Assurance: $29 / user
  53. 53. Office Outlook 2007 Client: $58 / user + $17 (SA)</li></ul> Unified Communications “Basic” (Unified Messaging + IM + Presence) - $231<br /><ul><li>Purchase: $93 / user ($71 UM + $22 (OCS Standard CAL)
  54. 54. Software Assurance: $35 / user ($29 (Exchange SA) + $6 (OCS Standard SA)
  55. 55. Office Outlook and Office Communicator Client: $79 / user + $24 (SA)</li></ul>Unified Communications “Advanced” (UC + Audio/Video Conf + IPT + App Sharing)- $352<br /><ul><li>Purchase: $190 / user ($71 UM + $119 (OCS Standard CAL and Enterprise CAL)
  56. 56. $59 / user ($29 (UM SA) + $30 (OCS Standard and Enterprise SA)
  57. 57. Office Outlook and Office Communicator Client: $79 / user + $24 (SA)</li></ul>18<br />
  58. 58. Server CAL “Dollars and “Sense”<br />“Ala Carte” Standalone Server License for Exchange Server 2007<br /><ul><li> Standard $488 with 1-year SA $122
  59. 59. Enterprise $2791 with 1-year SA $698</li></ul>“Ala Carte” Standalone Server License for Office Communications Server 2007<br /><ul><li>Standard $488 with 1-year SA $122
  60. 60. Enterprise $2791 with 1-year SA $698</li></ul>Key difference between Standard and Enterprise is that the Enterprise solution offers increased scalability plus redundancy. Functionally, the products are the same.<br />19<br />
  61. 61. Microsoft – In the Details<br />Microsoft’s approach to the market - run thin, use Partner-led Selling<br />Buy from Dealer -- Implementation VAR #1 – Service/Support VAR #2?<br />Don’t expect to “negotiate” off VLP like a typical telephony deal<br />Channel partner support fairly pricey $150 - $200/hour (MSFT ~300/hour)<br />Nortel – Microsoft playbook has Nortel leading with Exchange 2007<br />20<br />
  62. 62. IP Telephony Pricing Guidelines<br />21<br />
  63. 63. IP Telephony Pricing Guidelines (cont.)<br />22<br />
  64. 64. Competitive Pricing for 4,000 station IPT/UM /CC Design<br />23<br />
  65. 65. UC and IP Telephony Procurement - Top 10 Questions<br />Have you conducted an appropriate feasibility study? <br />Is your entire network infrastructure tested and REALLY ready for the new enterprise applications? Power, cooling, cable, QoS, PoE, carrier services, data electronics etc…<br />How will you define success and do you have clear, concise, and objective evaluation criteria to select the vendor(s)?<br />Do you have the appropriate user groups represented on your project team and executive sponsorship to help support & defend your project?<br />Do you have the right internal resources needed to select, implement and support the selected technologies? <br />24<br />
  66. 66. Top 10 Questions (cont.)<br />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”…<br />Do you have a clear service and support plan for after system acceptance? <br />Do you have sufficient growth and network refresh costs in your budget?<br />Do you understand how your decision will impact your organization and your vendor relationship(s)?<br />What is the best procurement and implementation methodology to support your strategy ? (HINT: Competitive procurement + POC/Pilot)<br />25<br />
  67. 67. Before You Buy Anything…<br />Have you conducted a feasibility study to align your technology roadmap with your company’s strategic business plan? <br />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:<br />What are acceptable alternatives to the current technologies?<br />What are the costs, benefits, and risks associated with the viable alternatives? <br />What is the best solution (current state, upgrade, migration, “rip & replace”)? <br />Can the best solution be “built” and supported and if so, in what timeframe? <br />The final objective is to answer the question: Should we implement the solution?<br />26<br />
  68. 68. Summary ---<br />IP Telephony and Unified Communications software-based architectures require new understanding of vendor technology, licensing models, and pricing…<br />Vendors have varying and evolving technology, software licensing, and costs…<br />Customers will need to do their homework to understand these vendor models and how they impact the total cost of ownership…<br />Begin with the end in mind; perform feasibility study, define your requirements, “Must Haves”, measures of success, and align with the business strategy…<br />Competitive procurement process yields the best pricing and service support offers…it’s not easy but well worth the effort!<br />27<br />
  69. 69. THANK YOU and Questions…<br />N’compass Solutions<br /><br />Douglas Carolus<br /><br />612.437.1477<br />28<br />