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ARTICLE:
Decision Points on Cloud Communications for Large Enterprise
Three different case studies reveal varying reasons for choosing on-premises or cloud-based deployments, where cost, resiliency, and flexibility are among the key factors.
Cloud communications gets lumped in with the rest of "Cloud Computing," though it is really a different prospect. The obvious difference from of the rest of cloud services is the real-time nature of communications. Payroll systems, customer Management databases and even storage may require bandwidth and fast response times, but nothing is as unforgiving to a slow network connection as real-time voice and video services.
Case Studies: Two Large Enterprises
We often refer to "cloud based" as an externally managed solution and "on premises" as an enterprise IT managed solution, even if the majority of the "on-premises" equipment is at the corporate data center. The actual business question is whether an enterprise should run the PBX with its own resources or outsource it to a service company. Here is a look at two enterprise customers and the decision points that drove their solution to a self-managed communications system (Robert Half) or communications as a managed service (Gatwick Airport, UK).
* Nikki Roberts is the Global Network Services Manager for Robert Half. Many No Jitter readers may remember Roberts from last year's Enterprise Connect Panel Session, "Is There a New Model for Enterprise Communications & Collaboration?" Robert Half runs more than 10,000 handsets on a ShoreTel platform out of their own data center, using internal staff to manage the solution.
* John Keegan is the Director of Communications Solutions Business at Fujitsu UK. Fujitsu was engaged by Gatwick Airport to deploy 1,100 stations initially, and eventually scale up to 7,000 stations using Cisco's Hosted Collaboration Solution. Front-end helpdesk support is provided by another Gatwick Partner, XChanging. Presumably, Gatwick's communications infrastructure is about as hands off as an organization of that size can get.
Gatwick looked at both on-premises and cloud solutions. John Keegan recalled, "Gatwick knew they wanted to take the airport forward and offer more advanced unified communication technologies. They weren't sure whether they wanted it on premise vs. a cloud solution, and they weren't sure exactly what technology." They ended up with an externally-hosted solution in order to offer services not just to their corporate users but to concessions across the airport.
Robert Half selected the ShoreTel Platform in 2005. Nikki Roberts recalled, "A cloud solution wasn't even on our radar in 2005." However, last year Robert Half upgraded to the current ShoreTel version and still chose to deploy in their own data center. Nikki Roberts's perspective is: "There isn't currently a cloud-based solution that covers every single aspect of the phone system in the way we use it. Do I feel that for certain parts of my organization a cloud-based solution would be OK? Yes, but for the core part of my organization that may be another couple of years down the line, and that's just to do with functionality."
Avaya's Differing Perspective on Large Cloud Deployment
Another view comes from Bob Camel, Senior Marketing Manager for Managed Services at Avaya Operations Services (AOS). AOS sets a threshold of 5,000 stations for multi-tenant solutions.
"The private cloud dedicated for a small or a medium-sized business is called COS Express (Communications Outsourcing Solutions Express)," said Camel. "We have some customers that are much larger. When you start getting that big, if you have 5,000 users, it requires a lot more customization, whether they are bringing it in-house or not." The customized offering is called COS (sans "Express"). Still, Avaya's position is that even with a larger solution that needs to be customized for each company, Avaya Operations Service is providing the same "UC as a Service" value.
"We can do a full OPEX model; pay by user or pay by port," Camel said. "Customers like that in today's tough economic world. It helps them adapt to new technology because they are not training or hiring people and it's all OPEX spend."
Cost Factors
For very large enterprises, externally managed communications is seldom presented as a lower-cost solution in terms of hard dollars. Even in the 2,000-seat range, the TCO was lower for an on premises solution, according to an Enterprise Connect series of mock RFPs coordinated by Brent Kelly, Marty Parker, and David Stein.
It would follow that even larger enterprises would have a tough time justifying the outsource model's economy of scale--since economies of scale will also be applying to ever-larger in-house deployments. In other words, whether you're an outsourcer or an enterprise deploying in-house, just because you need two support staff to manage 1,000 (seats, subscribers, whatever "units" you are supporting), it does not follow that you need 14 support staff to manage 7,000 units. If nothing else, you at least have better coverage for vacation days!
Nikki Roberts agrees that at such a large scale, the value of managed services is not about cost. "There are definitely some advantages to having someone else house your equipment, but when it comes to a large-scale phone system, I am not sure that cost is one of them," said Roberts. "It depends on where the business wants to see the costs. I haven't specifically researched it, but I feel like the break-even point would be about the same."
Resiliency and Business Continuity
Managed service providers point to the level of network resiliency and the support infrastructure as the real cost differentiator. Bob Camel cited Avaya's Matrix Management Platform (available only to AOS customers), their four U.S. and 11 global data centers dedicated to AOS support, and the staffing that are behind AOS. "The support matrix is near real time. We have over 750 dedicated communications managed services engineers as well as the normal Avaya technicians. Our Global presence is 24 X 7; for a customer to try and build a platform like matrix would be very expensive, tens of millions of dollars."
Fujitsu's John Keegan has a similar view of the network on which Gatwick's Cisco HCS deployment is supported.: "A key part of having this sort of service is that we deliver it highly available within a single data center, then duplicated across two data centers. The level of resiliency that you can build into it, you could not justify doing on premise."
Nikki Roberts had a more situational viewpoint when asked about system resiliency: "There's more than one way to answer, because resiliency is based on failover. No solution is perfect. Disasters don't discriminate: Is the disaster happening to me, or is it happening to my service provider?"
These comments reminded me of a client a few years ago that transitioned to a cloud-based contact center solution. They are a loan servicing company with nine regional locations across the
United States, each with a team performing the same customer service tasks for the individual
region. If any site were to fail, the other eight could absorb the workload of the other site. With their own replicated call servers, the resiliency they could build into their own network could easily exceed a cloud provider's. And the calls don't need to be redirected anywhere they normally wouldn't go. A large enough enterprise is bound to have potential failover sites that are already part of their infrastructure.
Scalability
Perhaps one of the most prevalent perceptions of cloud communications that has crept over from cloud computing services is that telephony can be run simply as a subscription. John Keegan described this vision as a part of Cisco HCS:
"We have built this solution so that it can scale to a quarter-million seats at each one of the data centers. We create the virtual machines, and that virtual machine initially for Gatwick is 1,100 seats. As we move this out to several thousand seats, we change the properties of the virtual machine to allocate more disk space and more memory. It is not a case of having to physically make changes; we make changes that are at a logical level".
Even with Robert Half's system of internally managed telephony services, Nikki Roberts agreed regarding this potential benefit of a cloud service. "I feel that it has a lot of value. If we were to have a big upturn in personnel that were all going to start on Monday or Tuesday, there is definitely an advantage that I can't do on premise. In terms of speed of change, a hosted solution is always going to allow you to be slightly quicker. That's where I feel that the economy of scale is; a quick upturn and a quick downturn."
John Keegan also stated, "We manage the Wide Area Network for them and we'll be working with Gatwick and Xchanging on the LAN side to make sure configuration is appropriate to mark the traffic. It really is a three-way project. We've got a project manager for Gatwick as a customer, plus Xchanging and Fujitsu. We're working in partnership to make sure that we can deliver the service for them. It will be important on the wireless side as well if they start to use their Jabber clients on their smartphones and tablets."
What is revealing about the three-way partnership at Gatwick is that whether it is performed by a third party, a one-stop cloud communications provider or internal staff, you really cannot increase your capacity--say, doubling your allocated telephony volume--by making a single call to the entity supporting the service. There are more processes and infrastructure that would have to be upgraded to support the increase: Perhaps the Wi-Fi network would need to be re-designed for higher density, or the wired LAN would now have to provide power over Ethernet (and possibly backup power).
Software Updates and Upgrades
"How do you give an IT manager the ability to keep all of his applications and resources up to date?" asked Bob Camel of Avaya. "Whether it's applications with software or just training of the people as we bring in SIP technology or more video technology, how do we do that?" asked Bob Camel from Avaya.
"This is what cloud and managed services are doing, allowing IT to bridge that gap," Camel concluded.
Indeed, many large enterprises are years behind on their current telephony system version, and not always due to budget constraints. Often there is such a large project involved in the upgrade, the expertise and resources are just not available internally. Cloud and managed services promise to keep you current. John Keegan described the Gatwick Airport solution as the "latest version from Cisco on a per customer basis." Still, there will always be a project involved. On-premises switches and gateways will require upgrading.
Robert Half waited several years to upgrade their ShoreTel system version, but Nikki Roberts had specific reasons to wait: "Functionality that the business wanted had changed so much between versions that we had to work with our provider to ensure functionality was similar to what we had previously. We did not want to go through a big re-training exercise."
That's a valid point: Often the reason enterprises keep prior versions is that there is not a compelling business case for the upgrade. Roberts stated, "Look at it a different way. With a Cloud solution, you may be forced to upgrade because you are contractually tied into it and the system has to stay at a set standard. But what if there is something about that upgrade that you don't want?"
Enterprise Mobility Strategies
Like almost every large IT organization, enterprise mobility is a key strategy to both Robert Half and Gatwick Airport. In a press release regarding the Cisco HCS selection, Gatwick Airport CIO Michael Ibbitson stated, "By adopting this new approach, we'll be transforming the way our staff operate: Video conferencing each other--and working from home effectively during snow days. This slicker operation will have a significant impact on passenger experience--which is what we're always striving to improve."
John Keegan from Fujitsu concurred, "They will give out a number and that will allow them to use whatever device they are located near to pick up the call, whether it's a soft client on the mobile, a soft client on the PC, or they log into a physical handset."
Robert Half has a mixed solution for their mobility strategy. They use the ShoreTel mobility client for telephony integration but also use a hosted solution. Roberts stated, "Many users work in a traditional office environment due to the nature of their jobs. However, there is another part of our organization that uses an off-premise solution, which has more functionality, including video, an important feature for many of our colleagues." Even if this is a small part of their telephony infrastructure, does this mean that Robert Half is really a "hybrid cloud" enterprise?
Conclusion
What I found refreshing about all three of these conversations is that enterprises and service providers are putting functionality first. Several years ago, large organizations seemed to be striving for cost reduction with a large volume of outsourced services, but now the conversation is around functionality, which is a much healthier trend for communications technology.
It is interesting that even with different outcomes (cloud vs. internal) the decision points for both companies (and the value proposition from Avaya AOS) were so similar. Resiliency, deploying new technology, and the mobile workforce were key components in the solution. Perhaps the most positive point that these case studies make is that there is more than one way to successfully pursue these goals.
"SCTC Perspectives" is written by members of the Society of Communications Technology Consultants, an international organization of independent information and communication technology professionals serving clients in all business sectors and government worldwide.