When the Cloud Brings Sunshine
Mar 17, 2016
Enterprise Connect 2016, which took place in the second week of March, marked the culmination of several months of hard work, anxiety and excitement as communications solutions providers prepared for the main event of the industry. Most market participants spend a good part of the first quarter of the year in frantic preparation to impress customers, partners, analysts and media with their new product launches and strategic initiatives at the event. March Madness doesn’t even begin to describe the scheduling chaos of Enterprise Connect pre-briefs and onsite meetings! But the euphoria of the event truly makes up for the annoyance of double- and triple-booked meeting slots and the blisters from walking miles and miles in the Gaylord Palms jungle maze.
As always, I had to sacrifice the comfort and enjoyment of attending the keynote speeches and break-out sessions in favor of private briefings with as many companies as I could fit in my 7:30am-to-11:00pm work days at the event. But thanks to media and analyst posts and many a conversation over drinks and finger food I received a good sense of what seemed to be the buzz at Enterprise Connect 2016.
Even putting my personal UCaaS analyst bias aside, I have to agree with Michelle Burbick that this year’s event was about Cloud, Cloud and More Cloud. I don’t have specific stats at my fingertips but here are some facts and anecdotal evidence which prove that the cloud theme dominated the event:
Top event sponsors (among others) included 8x8, whose logo couldn’t be missed in the walkway from the hotel atrium to the Convention Center, RingCentral (thank you for lunch), and Vonage, which co- sponsored theCube with Oracle and CafeX.
Keynote speeches (Avaya, Cisco, Google/Dialpad, Microsoft, etc.) and main-stage panels sent messages to the audience that businesses are no longer questioning whether to move to the cloud, but debating when and with which provider and solution.
Many product and strategic announcements had to do with either cloud solution launches or existing cloud product enhancements (ALE, Avaya, BroadSoft, Cisco, Microsoft, Polycom, etc.)
Cloud providers (RingCentral, Vonage, etc.) reported record interest in their solutions measured in visits to their Exhibit Floor booths. In fact, RingCentral claims a four-fold increase in booth visitors compared to last year.
A number of articles and blog posts captured the essence of my presentation, so I am not going to rehash its contents here. An interview I gave to theCube also highlighted some industry trends and findings from my research. However, I’d like to share some further observations on cloud communications market trend and significant developments at Enterprise Connect.
It is not by accident that my session was titled “Who’s Who in Cloud Communications”. The rapid pace of technology evolution and competitive dynamics in the cloud communications market are compelling industry participants to constantly reinvent themselves and boost their competitive positioning through mergers and acquisitions (M&A). Just looking at a competitor infographic I used in my presentation, I am stunned by how dynamic this market really is.
A number of the companies that were still independent entities until 2014 (e.g., Corvisa, Grasshopper, iCore, Pingtone, Primus Canada, SimpleSignal and Telesphere) are now part of other organizations. Returning from vacation the week before Enterprise Connect, I had to change ThinkingPhones’ name in my slide deck to Fuze. Almost simultaneous with my Enterprise Connect presentation, Switch.co changed its name to Dialpad. How does one keep up with this much change? I can probably name about 120 cloud communications providers in North America, not even counting the agents, dealers and resellers, but new ones keep emerging every day.
Beyond M&A and company name changes, there are several other trends permeating and shaping the industry today, including:
Vendors becoming service providers
After several years of keeping the market in suspense with hints at an impending launch of a UCaaS solution, just weeks prior to Enterprise Connect, Microsoft announced a cloud PBX with PSTN connectivity, available both standalone and as part of the Office 365 E5 bundle, and offered retail by Microsoft itself. At Enterprise Connect, Microsoft showcased advanced interoperability with Polycom conferencing and collaboration solutions and announced key milestones, including: thousands of customers in production using Cloud PBX and PSTN conferencing, and a Cloud Connector Edition coming up in April that will connect Cloud PBX to on-prem systems.
A few months back, Cisco demonstrated continued commitment to its service provider partners with the re-launch of an enhanced Spark, turning what was originally a messaging app into a comprehensive cloud communications solution providing PBX functionality, PSTN calling, and a broad suite of team collaboration tools including persistent group chat, file sharing, and video and web conferencing. Cisco will host and manage Spark, but not sell it directly to businesses. Partners will be able to add PSTN calling to Spark to compete directly with other providers of cloud-based collaboration tools. At Enterprise Connect, Cisco announced a $150 million investment in a Cisco Spark Innovation Fund.
Alcatel-Lucent Enterprise (ALE) leveraged this major industry forum to announce that it is expanding its cloud offerings by becoming a cloud service provider as well. The company will introduce Alcatel-Lucent Rainbow™, a new, cloud-based freemium service operated by ALE.
Other vendors, such as Mitel, NEC and Toshiba have been UCaaS providers for a couple of years now, reporting varying degrees of success in this highly competitive market. Mitel is pursuing a unique approach with its vision for mobile cloud—a middleware enabling IMS-based enterprise communications solutions. At Enterprise Connect, Mitel launched a cloud-based next-generation messaging solution similar to Spark.
Cloud contact center becoming a critical adjunct to UCaaS
With contact centers moving to the cloud even faster than enterprise communications and collaboration solutions, many UCaaS providers have sought to enhance their offerings with cloud contact center platforms. Larger fluctuations in call volumes, greater solution complexity and smaller deployments have represented key drivers for cloud contact center adoption.
At Enterprise Connect, ShoreTel had the former Corvisa team on the front line engaging with booth visitors in conversations about the stronger value proposition of ShoreTel’s Connect Cloud solution bundled with Corvisa’s more advanced cloud contact center capabilities. PaaS and SIP trunking capabilities are two other key contributions to the ShoreTel portfolio from the Corvisa acquisition.
BroadSoft’s recent Transera acquisition aims to accomplish a similar goal—e.g., enable providers to offer businesses an integrated UCaaS and contact center solution with a “single throat to choke”. Transera’s innovative cloud-based, on-demand contact center solution allows providers to more cost-effectively add contact center capabilities to their portfolio.
XO Communications leveraged Enterprise Connect as a forum to announce a new cloud-based contact center service based on GENBAND’s cloud services portfolio. This solution will add value to XO’s existing UCaaS, VoIP access and SIP trunking portfolio and also enable the provider to tap into new customer opportunities.
Providers report multiple instances where cloud contact center gets their foot in the door, creating pull-through for their UCaaS services. In scenarios where businesses have already moved or are moving to UCaaS, cloud contact center is a natural addition and enhancement to the company’s existing cloud solutions. Overall, cloud contact center is going to represent a critical competitive factor in UCaaS provider market positioning.
Video and collaboration boosting the value of UCaaS solutions
A few months back, ThinkingPhones acquired leading video conferencing provider Fuze to enhance the collaboration capabilities of its UCaaS portfolio. As noted above, ThinkingPhones changed its name to Fuze just days prior to Enterprise Connect. The name change is certainly symbolic of the industry’s move toward broader UCC suites and company’s repositioning as a more modern collaboration-centric provider, away from a telephony-centric value proposition associated with the original company name.
At Enterprise Connect, 8x8 announced Virtual Office Meetings, a cloud-based video conferencing and collaboration solution, complementing 8x8’s already rich UCaaS and cloud contact center services. The solution enables secure, continuous collaboration from any device, anywhere in the world. New enhancements to the solution include borderless HD video and audio communications for immersive experiences.
APIs and PaaS enabling more agile cloud development, more rapid and cost-effective innovation and a broader ecosystem
I’m sure you’ve all heard it: “It’s an API economy”. Communications providers are creating open APIs for their solutions to give developers an opportunity to develop custom applications and capabilities and thus create more value for customers. Emerging platforms as a service (PaaS) pursue similar objectives: accelerate app development and lower the barriers to developing customized solutions addressing specific customer pain points.
Avaya utilized its keynote slot at Enterprise Connect to announce the spin-off of a new entity called Zang, which will leverage Esna and Avaya technology and expertise to deliver a PaaS along with some prepackaged cloud apps. Zang is said to mean “bell” in Persian and the announcement did ring loud and clear that Avaya is prepared to make some bold moves to reinvent itself. Anecdotally, Avaya is investing close to six figures into the new entity, which will be governed by a separate board of directors. Zang will offer both a communications platform as a service (cPaaS) and communications applications as a service, the first of which is a persistent team collaboration solution, similar to Slack and Spark, but more real-time communications-centric. Developers can use drag-and-drop tools, robust APIs and simple SDKs to build custom apps and integrations. For more information, click HERE to visit Zang's website.
Shortly before Enterprise Connect, RingCentral reported rapidly growing demand for its RingCentral Connect platform, which provides developers with the tools and services to build and manage custom integrations with Salesforce, Microsoft Office 365 and Google for Work. More specifically, RingCentral announced a record one million API requests per day, which represented more than 50 percent increase in third-party developer requests in Q4 of 2015. RingCentral also announced that it is making WebRTC APIs available to third-party developers in beta, enabling the integration of RingCentral’s voice capabilities into web browsers and apps.
Twilio, which participated in my panel, has become a symbol of a new generation of market participants delivering value to businesses through APIs and building blocks rather than complete SaaS solutions. Salesforce.com is integrating Twilio into Chatter, which will open a large addressable market for the innovative technology provider. At Enterprise Connect, Twilio announced the launch of Twilio Interconnect, which enables private connections between Twilio and the customer's premises-based infrastructure, thus improving the quality and security of the communications solutions powered by Twilio.
Hybrid keeps Cloud down to Earth
As fascinated as everyone is with cloud and its benefits, solution developers realize that many businesses will continue to deploy parts of their communications infrastructure on the premises for a long time to come. Call control is the communications technology that seems to have the strongest roots on the customers’ premises (as Frost & Sullivan market analyses and survey data show).
It is not surprising that at Enterprise Connect both Cisco and Microsoft announced capabilities that enable hybrid deployments. Microsoft launched Cloud Connect, which integrates premises-based telephony systems with Office 365. Cisco highlighted the integration of Spark with premises-based Cisco call managers. Toshiba and NEC support hybrid deployments as well.
There are companies such as Star2Star, Fonality and Fibernetics, which have been doing hybrid for a long time and which have been tremendously successful with their different versions of hybrid. Hybrid architectures can provide a number of benefits including: reliability, security, QoS and even cost savings, enabled through the use of an on-premises infrastructure element. I expect most cloud communications providers to support hybrid deployments going forward.
There were plenty of other cloud and UCaaS announcements at Enterprise Connect by AT&T, CallTower, Fusion, Masergy, NetFortris, and others, and I expect more to come throughout 2016. I didn't capture all news and trends in this blog post but would be happy to share a perspective offline.
It is no secret that premises-based communications solutions are losing their appeal and PBX revenues are declining. Stagnation in the enterprise communications space over the past few years had clouded the excitement around continued technology innovation in this dynamic market. At Enterprise Connect 2016 “the cloud” shone bright, paving a new road for communications solutions providers to thrive and flourish amidst turbulent market transformation. It will be interesting to see how the “old guard” will compete with the various next-generation cloud-centric providers.
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