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The VOIP visionaries have always hung out in the consumer space, for the most part; after all, VOIP started out as a subversive, disruptive application whose advocates more or less explicitly predicted that they’d kill the big telcos. A noble goal, and one that proved well beyond their means. Even the wildly successful (and free) Skype didn’t come close to killing the carriers.
It did, however, go a ways toward hollowing out their business model. You could argue that the mid-1990s RBOC model—in which the carriers still got 80% of their revenues from legacy voice even as the Internet blasted into orbit—was doomed once broadband reached critical mass. And the carriers are moving that way with their various fiber deployments and video services. Yet the carriers still aren’t completely weaned off low-value voice—at my house, we still pay more for our landline voice than we do for our DSL. Of course, a chunk of that voice bill consists of various fees and surcharges, which means sundry governments may, as well, be in for a rude awakening about that particular revenue stream.
But now there’s a big debate in the visionary part of the VOIP industry, where they’re asking, as summed up in this GigaOm post, “Is VOIP Dead?” Om Malik says it is, while others say that innovative voice services for the masses—essentially, a kind of consumer Unified Communications, as I take it—is still possible. (Irwin Lazar weighs in at No Jitter, here).
I side with Om and Irwin. I think voice is a really low-value application for consumers—it really is commoditized on the consumer end. Consumers like me keep our landlines as a kind of security blanket, and because, ironically, when you work from home it’s cheaper to use the landline when you’re calling into a toll-free conference bridge. Other consumers get rid of their landlines and go all-cellular and do fine, saving the basic landline charge and aforementioned onerous fees into the bargain. Both types of consumer have made a choice based on something other than the voice service itself—i.e., they’re still not looking at voice as anything other than a capability you can run through a telephone of one kind or another.
I don’t see why that will change, why a consumer would add voice to any “application” other than a video game. And a videoconference, of course.
The enterprise is another matter. Consumers may be looking to take complexity out of their voice communications, using a special-purpose device when they do desire voice calling. But if your business is on the other end of that call, you may not have the same need for simplicity of treatment. You never did: You had key systems or PBXs or ACDs to route calls coming from people who, at the other end of the line, were shouting to their spouses, “I got it on the upstairs phone! You can hang up now!”
And when communications happens within the enterprise, or with business partners, etc., voice becomes even more useful as an addition to other applications, and as a session that can be set up, re-routed, combined with other sessions, and generally *handled*.
So in the enterprise, VOIP isn’t dead. It may be rolled out more slowly over the difficult times ahead; but as the basis of next-generation communications systems, it’s business critical.
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I’ve been sitting here trying to come up with some meaningful predictions for the industry in 2009, but we all know that 2009 is going to be a crapshoot. Everyone’s placing the economy at the top of their list of the major stories for 2008 and 2009, which obviously is the right call, but if anything we’re probably underestimating the impact of the economy. Lower revenues for enterprises and their suppliers is just the beginning, and maybe the only predictable thing.
Consider a recent Wall Street Journal report quoting a projection that as many as 25% of all retailers could be in or near bankruptcy within the next 2 years. The article also describes some of the changes that retailers are already implementing in their business processes as they face a business climate that may have changed permanently. The sector has already begun changing how it approaches inventories, physical facilities and supplier relationships, among other things.
The U.S. economy seems almost certain to see contraction and industries likely to see consolidation at a scale beyond anything that’s happened since the emergence of the Internet. And that means the big story for enterprise communications in 2009, but the one that may be submerged like the proverbial bottom of the iceberg, is that the two elements addressed by Unified Communications—business processes and user interfaces—may both undergo significant and potentially long-term changes beginning next year within many enterprises.
That of course means there’s an opportunity for communications to play a role in the transition, to help companies adjust and stay responsive as they change their business processes to adapt to the new business reality. Or it could mean that companies, given the state of transition, might choose to wait for an environment of greater certainty before making significant upgrades to their business process automation, including communications.
The user interface aspect may be equally unsettled, in lots of ways. One thing I’ll be watching for is how much growth and evolution there is in social networking. The most obvious expectation would be that if unemployment swells next year, the use of social networking will grow as people employ these tools to look for work and grow their base of knowledge and experience. However, one place to expect big job cuts would be in sectors like manufacturing and retail—areas that haven’t been as obsessed with social networking as many of us in high tech. Does that mean social networking isn’t a possible avenue for these workers, or do these folks represent a potential reserve of new adopters as they seek new jobs and potentially new careers?
For that matter, will the integration of social networking and communications be accelerated by tough economic times? Cisco is shrewdly emphasizing collaboration as it moves toward this integration, as Blair Pleasant blog recently discussed on No Jitter. The need for collaboration is likely to grow in a business environment where business process changes, and mergers and acquisitions, create not only changes to the underlying IT infrastructure, but also a need among colleagues to adapt to radical business changes and, where possible, shape them.
What this all adds up to is a year where enterprises may not even know what their business processes should be any more, let alone whether and how to communications-enable them. At the same time, they’ll be facing challenges that require employees to communicate and collaborate more than ever before.
This issue of VoiceCon Enews is sponsored by Empirix
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Allan Sulkin’s latest No Jitter feature details the results of Allan’s third annual survey of North American consultants, and the results I found most intriguing had to do with the consultants’ experiences and opinions regarding Unified Communications.
For starters, Allan found that just about half of the consultants he surveyed had already participated in at least one UC procurement and installation. What’s particularly noteworthy is that in asking the question, Allan left less wiggle room for defining UC than we’ve seen in other analysis. Specifically, his survey asked, “During the past year have you worked with a client to purchase and install a full-featured UC solution … (audio conferencing bridge system, only, and/or cellular extensions do not count).” Having already considered IP telephony separately, Allan here exempted two more items that vendors typically sneak in under the definition of UC, even if those technologies are being used in a standalone manner: Audio conferencing and cellular extension.
Audio conferencing is an easy call; just buying a conference bridge doesn’t make you a UC implementer, even if it is an IP-based bridge. The inclusion of cellular extension probably would generate more debate; in fact it has, in other No Jitter posts. But choosing to exclude a standalone cellular-extension from a UC definition is certainly a very defensible position.
But here’s the thing: Even with those restrictions, Sulkin still got 52% of his survey respondents saying they *have* done at least one UC implementation.
And just to clear up confusion, Allan followed up with a question about communications enabled business processes or CEBP—“During the past year have you worked with a client to purchase and install a Communications Enabled Business Process (CEBP) solution that integrates communications tools with a Line of Business application, such as SCM, ERP, CRM, et al?” Here again, there was what I’d consider a strong “Yes” response: 23%.
So in Sulkin’s survey, more than half the consultants had implemented what the UCStrategies.com team calls “UC-User,” meaning Unified Communications aimed at user productivity, mainly by integrating communications media and channels. Furthermore, almost one-quarter of the consultants in the survey have implemented what UCStrategies.com calls UC-Business Process, or what much of the market is calling CEBP.
I find that latter number a bit surprising; you’d think there would be more case studies floating around out there if CEBP implementations were as common as the survey suggests—23% is a lot for a relatively new, not necessarily mature technology. On the other hand, Allan’s survey sample wasn’t huge—ranging as high as 60 responses, depending on the question (individual questions weren’t broken down with number of responses). So you’re talking maybe a dozen consultants who have done at least one CEBP implementation—possibly more than one implementation, but maybe not. The survey was done at the annual Society of Telecommunications Consultants (STC) conference, where many of the participants have large enterprise customers, so I think the fair conclusion to draw is that there has been some limited experimentation going on with CEBP. Overall, I agree with Allan that this quote probably represents the majority, when it comes to clients’ view of CEBP: “Lots of interest, feasibility discussions, but no takers thus far.”
So I wind up thinking this survey paints a picture of UC as a leading-edge technology that, during a normal business cycle, would be well positioned to continue growing and attracting more attention. Whether the usual rules still apply, however, is another question.
This edition of VoiceCon eNews comes to you on the one-year anniversary of the launch of our editorial website, No Jitter (www.nojitter.com, where else?). A lot has happened in the 366 days since No Jitter went live; the world looked very different on December 9, 2007, and everyone’s approaching this New Year with much more dread than we expected would be clouding our horizon a year ago.
A year ago, Nortel stock was selling for more than $15 a share. Now it’s under a buck and the company’s future, not surprisingly, is uncertain.
A year ago, if you’d told me the worst screw-ups of the Bush Administration had yet to manifest themselves—heck, if you’d told me that same thing four months ago—I’d have said you were crazy.
If you’d told me layoffs would be happening across the industry, and that even Cisco would be making cost-cutting moves like closing for four days over the upcoming holidays, I might have believed it—business cycles do happen—but the news wouldn’t have carried the weight it does now.
But we’ve learned some things in the year since we closed down the still-much-missed Business Communications Review magazine and hung out the No Jitter shingle. One is that we were probably right to close BCR; hearing that the Christian Science Monitor, U.S. News & World Report and who knows how many smaller publications were going all- or mostly-online has convinced me that we weren’t being rash in getting rid of the print magazine. We’re all still sad about it, but the move from print to electronic publishing is too big for most of us to fight.
And going on line with a blog/in-depth feature combination site has enabled us to do things we couldn’t do with a monthly magazine that ran on a six-week production cycle. When Lou D’Ambrosio resigned unexpectedly as CEO of Avaya due to health reasons, thousands of readers flocked to our site, the biggest traffic day of the year. Readers came by the thousands and commented by the dozens and in sharp tones when Allan Sulkin criticized Nortel’s analyst outreach; when I floated ideas like “Microsoft should buy Nortel;” and when Siemens was finally acquired by the Gores Group private equity firm.
But what’s especially warmed my heart is that consistently, the biggest draw to the site have been the in-depth features: Sulkin’s annual market update, Miercom’s lab tests, articles by consultants like Steve Leaden and Brent Kelly—in a word, BCR articles. Features that run to 2,500 words and beyond, abundantly illustrated with network diagrams, market trend charts and other geeky graphics of the kind that used to adorn the old print magazine.
This confirmed what we always believed, which is that our audience is made up of people whose intelligence commands respect, and who need lots of information, well-written and clearly presented, giving them the most accurate picture of a communications industry that’s changing more rapidly, and in less predictable ways, than has been true in years.
So No Jitter’s mission for 2009 is to do what we began doing in 2008, but more of it: More fostering of community; more blog posts with more timely coverage of an industry facing critical challenges; and more in-depth analysis of the technology and business challenges that you face in your jobs.
No Jitter offers you, the enterprise communications industry community, a place to come together, as well as delivering (I hope) a wealth of provocative, interesting and useful ideas and analysis around which to gather. I am indebted to everyone who gave us a strong start this past year, especially our lineup of tremendous bloggers and feature authors, many of them the same people who made BCR a trusted information source over the years. And I’m grateful to those of you who have made No Jitter a regular stop on your rounds of Web-based information sources. Together, I hope we can make the site even better in the coming year. Please keep telling us how we’re doing, and especially how we could be doing better.
This issue of VoiceCon Enews is sponsored by Xorcom
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We’ve got a pretty cool one-two punch in the Features column over at No Jitter: Our old friend Hank Levine of the law firm Levine, Blaszak, Block & Boothby recently sent an article on ways that the carriers will try to get you to spend more money during the economic downturn and I just finished posting an article written by Byron Battles, longtime consultant and one of the heroes of the epic VoiceCon blizzard of 2003. Byron’s writing about one of the carrier offerings you’ve been hearing more about recently: Hosted IP communications services.
Hank focuses on a range of carrier services, and he dwells more on managed than on hosted offers. But both Hank and Byron remind us about some basics that I think are important to review, especially because the personnel responsible for enterprise voice systems has changed since the time when services like legacy Centrex were a significant market option. I think it’s fair to say that IT folks are more open to outsourcing portions of their infrastructure than more traditionally-minded telecom people are.
In his article, Hank recounts the many tricks that the carriers keep up their sleeve—things ranging from clever new ways to hide charges, to the methods they have for boxing you into bad terms or bad deals. The underlying reality—why this is important information now—is that during tough times, we all try to generate extra revenue however we can. And as Hank points out, when a carrier needs to generate extra revenue, guess where that extra revenue is supposed to come from? (Hint: You).
In his article, Byron describes how Hosted IP services differ from Centrex; how these services are architected, sold and managed; and what you need to beware if you are one of those enterprises that’s taking a new look at communications as a recurring operating expense, rather than as capex. Among many important points, he reminds us that you can’t just buy a hosted service and wash your hands of the voice function: You must maintain a voice-grade internal IP network, you have to manage the service provider relationship, and you may have some capital expenses anyway as you make your network IP-telephony-ready.
Carrier services are a necessary part of any enterprise network, so you can’t just refuse to deal with these issues. You may see yourself as a technologist rather than as a negotiator, but if that’s the case, then you need to find a negotiator. If you install money-saving technology like voice over IP, but allow the service provider to drain the savings out from under you, the whole exercise will have been pointless.
It sounds like I’m painting the carriers as the bad guys here, and that’s because I am. Their interests are not aligned with the enterprise’s, and this is really the premise of Hank’s article: They want more of your money, at just the time when you want to spend less of it. Ultimately, some of their services may truly provide you with value, and that includes Hosted IP communications. But it’s not a move to make lightly.
The phrase that comes to mind when I think about these 2 articles is the warning that George Washington gave in his farewell to the nation: Beware of any “entangling alliances.”
