Let me put this plainly: IT managers at enterprises are buying cloud solutions, not cloud communications solutions.
This is something that cloud communications solutions providers still have a difficult time understanding. That’s because most of these providers – including those that offer VoIP, UCaaS, and other similar types of technologies – are, at heart, old school telecommunications folks, used to dealing with specific challenges relating to that industry.
But we’re dealing with a new cloud-based reality here, one that goes far beyond simple communications. Enterprises are embracing the cloud, but they’re not doing it piecemeal; they are looking at every possible cloud deployment, from communications to storage to disaster recovery and beyond. That’s why, according to Gartner, spending by enterprises on storage systems and software and professional services will represent a $12.2 billion and $14.0 billion market, respectively, by 2016.
Cloud communications providers, on the other hand, have been content to focus on offering a single, albeit highly valuable, piece of this pie. But, as pointed out by Michael Quinn of Q Advisors during the most recent Cloud Communications Alliance quarterly meeting, it’s not nearly enough. Not if they want to expand their reach into the enterprise, where cost-effectiveness and consolidation is on the mind of many IT managers.
These managers are being tasked to do wholesale cloud deployments across their entire system. As such, they are increasingly looking to single vendors who can fulfill their many needs. After all, going with one managed service provider (MSP), rather than several, can greatly simplify their operations in a number of ways. They can ensure that everything works well together, keep costs under a single PO, and forfeit the hassle, cost and time associated with having to manage multiple vendors.
Given this, why would an IT department choose to go with a company that provides only cloud communications? Simply stated, they would not. As such, cloud communications providers should greatly consider broadening their offerings and expertise to include additional cloud components that managers are looking for. These include support for:
- Critical business needs, including storage, integration with business software, even social networking and GPS or location-based information
- The “bring your own device” movement through full UC functionality across all mobile clients and platforms
- Vertical industries, exemplified by deep expertise or specialization in a particular market, particularly those that might feature highly distributed organizations (healthcare, legal, retail, etc.)
All of these are playing significant roles in how organizations are evaluating cloud providers (note: not cloud communications providers alone). They are asking for a lot, but ultimately they’re looking to simplify their own cloud deployments, which can be daunting and complex.
The good news is that this opens a wealth of opportunity for providers. At this time, there really is not a dominant cloud and MSP because no one is yet offering all of the tools in the toolbox. There’s a space for this type of organization to enter the market and make some massive in-roads into the enterprise space.
It’s not easy, particularly for companies that have such a long history steeped in a legacy technology like telecommunications. It will require not only a shift in thinking, but also a significant investment in market research, product development, and perhaps even the hiring of people whose backgrounds are highly diverse.
There’s no doubt that it must and should be done, however. IT is no longer purchasing solutions in silos. As a result, cloud communications providers should stop offering their wares in such a manner. They don’t need to become Rackspace or Amazon, offering the most robust cloud services on the planet, but they do need to branch out from just focusing on communications if they wish to make in-roads. In short, they need to diversify and stop considering themselves cloud communications companies – or they will ultimately perish.