SMBs slow to catch on to unified communications, but that could change

Unified communications (UC) is often touted as the ideal communications solution for an increasingly mobile workforce, and to date, UC has been targeted primarily at larger companies. Most small and medium businesses have been left out in the cold by vendors, but analysts say the tide is already beginning to change. "I think it's still quite early for SMBs in the UC area. Generally, there hasn't been many products geared specifically to SMB needs," explains Jayanth Angl, a research analyst with London ON-based Info-Tech Research Group. "In a lot of cases, SMBs aren't in a position where they've identified the need for some of the features that are available in UC platforms, such as web and audio conferencing. There may be a need for one or more of these capabilities, but to justify a full-scale deployment requires more than that." While Angl concedes that some of the larger vendors are getting a foothold in the SMB market, "they haven't really established themselves as the best solution for that segment. There have been a number of smaller start-ups who've had surprising success with IP phone systems specifically geared to the SMB market." Vancouver-based Sutus Inc. is only just one example. The company has customers in a variety of verticals including real estate, financial services and the retail sector. "It's not so much about what they do, but what they need. If a company has 3-25 employees, needs a phone system, wants to share data, voicemail to email, wants remote access or a if they have a sales force that travels, we're here," says Shawn Chute, Sutus' executive VP. The company sells its gear between $4000 and $5500. While it's clear smaller UC vendors are addressing the needs of the SMB community, the larger players such as Cisco Systems Inc. and Nortel Networks Corp. are also catching the SMB fever. Last April, Cisco launched its Smart Business Communications System, a UC platform geared to the SBM. Nortel's UC 1-2-3 applications not only targets SMBs, but also different needs; including mobile and work from home employees. Yet with units starting at $30,000, the costs remain prohibitive for start-ups and smaller operations. While the benefits of unified communications are going to make their way to the SMB space, it might take some time. According to a 2007 survey conducted by IDC Canada, 8% of medium-to-large (SMBs were not included) Canadian companies have integrated some aspect of UC in their operations. The mid-market is where the biggest opportunity is, according to Lawrence Surtees, VP of communications research at IDC, highlighting one of the possible reasons why unified communications has been slow to come to the SMB space. "In telecom land, all the big guys chase the same 500+ companies. The conundrum there is that 60% of the business revenue in that market comes from the same 60 or so companies," he tells Network Letter. "The mid-market is actually the biggest in revenue size. I'd argue that the mid-market is a good place to target and it might serve as a training and proving ground for UC systems." Raymond Boggs, VP SMB research in IDC's Boston-area office, says this technology has resonated with mid-sized firms because they seem to understand the benefits of unified communications. "You really need to understand what the solution is and what you want to be getting. Cost is one thing, but the complexity and the need to really understand what you require and how to meet those requirements is another," he says. Angl argues that the most appealing UC model for SMBs can be found in hosting services. "The hosted, or as a service, model is just more practical for SMBs, particularly with UC," he states. "Smaller organizations have found, with Microsoft Exchange for example, deploying an exchange infrastructure internally requires a dedicated, full-time IT staff. For smaller organizations, outsourcing this work to a service provider makes a lot of sense." While there is little quantitative data on software as a service (SaaS) adoption of UC platforms, SMBs are warming up to the concept in general, according to IDC. Its data show 2.3% of US small businesses are currently integrating some form of SaaS in their workforce, while 5.1% plan to do so in the coming year. Medium businesses are more inclined to incorporate these services, with 9% currently using SaaS and 15.2% intending to do the same. "With UC, most of the smaller organizations are still in an early stages of planning and understanding the technology and what it can really offer their specific environment," echoes Angl. "A lot of the benefits around UC generally deal with productivity improvements for employees or project teams and these are pretty hard to measure on their own. The business case is not as easy to develop with UC." Surtees agrees: "One of the biggest challenges is the confusion and lack of clarity about what UC systems are exactly. That's something that often needs to be addressed by vendors." If UC systems are going to gain significant traction in the SMB market, the overall consensus seems to be that vendors will have to target SMBs more aggressively while offering scalable and more affordable versions. "While UC has been talked about for quite a while across the board, viable UC platforms have only really emerged in the past 12-18 months for enterprises to deploy. We're just now seeing hosted offerings of UC and that wasn't available 8-12 months ago," says Angl. "It's very obvious that are moving in the right direction."

SMBs slow to catch on to unified communications, but that could change

News | February 13, 2008

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