This document discusses pricing models for IP telephony and unified communications solutions from various vendors. It finds that: 1) Vendors like Avaya, Cisco, and Microsoft are evolving their licensing models from standalone to bundled pricing in an effort to simplify costs for customers. However, pricing complexity remains an issue. 2) A feasibility study is recommended to define requirements and success criteria before selecting a vendor solution to ensure alignment with business needs and strategy. 3) Competitive procurement yields the best pricing and support offers, though it requires more effort. Doing one's homework to understand each vendor's technologies, licenses, and total cost of ownership is important.

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 1

3. 1996 2003 2009 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. 3

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 4

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…?5

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 7

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 8

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: 9

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) 10

28. Plus - Essential Operate for software support (required for CUWL)

31. Business includes UCM 7.0 with DLU for one device. Intended for <500 employees, < 20 sites. CUWL Comparisons 13

33. Essential Operate Services (Software support): $21/user per year

35. Essential Operate Services (Software support): $21/user per year

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 port14

41. IM/Presence/Chat + Voice + Web/Audio Conferencing = OCS 2007 Enterprise CAL

42. Unified Messaging = Exchange 2007 CAL15

44. Full telephony functionality/E911

45. Audio conferencingOCS R3 planned for 2010 (same year Nortel ICA expires!) 16

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)

50. Desktop sharing + telephony/conferencing features in Enterprise CAL Suite17

52. Software Assurance: $29 / user

54. Software Assurance: $35 / user ($29 (Exchange SA) + $6 (OCS Standard SA)

56. $59 / user ($29 (UM SA) + $30 (OCS Standard and Enterprise SA)

57. Office Outlook and Office Communicator Client: $79 / user + $24 (SA)18

60. Enterprise $2791 with 1-year SA $698Key difference between Standard and Enterprise is that the Enterprise solution offers increased scalability plus redundancy. Functionally, the products are the same. 19

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 20

62. IP Telephony Pricing Guidelines 21

63. IP Telephony Pricing Guidelines (cont.) 22

64. Competitive Pricing for 4,000 station IPT/UM /CC Design 23

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? 24

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) 25

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? 26

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! 27

69. THANK YOU and Questions… N’compass Solutions www.ncompass-inc.com Douglas Carolus dcarolus@ncompass-inc.com 612.437.1477 28