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Google has become a powerful force in the lives of many people. It certainly is my window to the World today as I land on the Google search page as soon as I open my eyes in the morning and before I go to bed at night. It has become a symbol and an icon, our “virtual home”, almost synonymous with the Internet, Internet browsing, and … the Cloud! With its presence already established in the consumer world, Google is also making an aggressive foray into the business market with a set of cloud applications.
source: Frost & Sullivan
Since I promised to post several articles on the raging battle between premises-based and hosted/cloud communications, I will dedicate this one to Google. So much has been written about it, that it seems there is nothing left to say. However, two of my colleagues – Subha Rama and Alaa Saayed – put together two very different pieces on Google that provide some unique value. Subha chose to look deeply into Google’s corporate culture and identified several major factors that have driven and will likely continue to drive Google’s success going forward. Alaa, on the other hand, managed to get a hold of Rajen Sheth, Senior Product Manager for Google Apps, and received some first-hand insight into Google’s vision for the enterprise market.
My key takeaway from the two articles is that Google’s success is largely due to the fact that it’s built on the tenets of the Internet and the Internet age. Its product portfolio benefits from the advantages of the web and the cloud; its culture and internal organization also derive their efficiency from applying the innovative spirit and democratic principles of the new age in IT and communications technologies.
Here I provide excerpts from both articles, as well as links to the complete versions on our website.
Subha Rama’s piece is titled: “Google: the IT Iconoclast ”, and it can be found here. According to Subha, Google’s success story is based on two simple tenets: “question established ways and have a healthy disregard for the impossible”. She writes: “As Google grandly outlined in its first SEC filing, its mission was “to organize the world’s information …. and make it universally accessible and useful”. Google believed that the most effective, and ultimately the most profitable, way to accomplish this mission was to put the needs of their users first. This has become more or less the governing principle behind almost all its product innovations.”
Then Subha goes on to ask “What makes Google, well… Google?” She believes that, at Google, “crazy definitely triumphs comfy”. She points to the fact that Google strives to hire only the best talent out there, people who are academically exceptional and are capable of thinking out of the box. You can find neurosurgeons and rocket scientists, in addition to nerdy computer engineers, among Google’s employees. Also, it continues to adhere to its Stanford culture, allowing employees to dedicate 20 percent of their time to work on their pet ideas. This is how products such as Google News, Orkut and Google Images came into being. Subha recognizes that Google employees are constantly challenged to think in new directions and come out with defining ideas. She further notes, however, that Google also focuses on productivity and enforcing deadlines so that it is not drowned in chaos, which can be so typical of highly creative environments.
Further, Subha discusses “the long-tail model”, which forms the foundation of Google’s strategy: “Google strongly believes in the long-tail model, that as the costs of online production and distribution fall, niche products and services can become as economic as mainstream ones. This theory forms the core of a cloud-based service delivery model, which while accommodating a wide variety of applications is not subject to the lowest-common-denominator principle that we apply in a physical environment.” According to Subha, this business model focuses on a large number of products, each targeted at a relatively small audience, thus addressing niche segments, and building customer communities in the process. Further she concludes that the Google business model is in fact based on openness, interoperability, decentralization and accessibility, the pivots around which cloud-based services are built.
Alaa Saayed tackled similar issues of corporate culture and success factors in his recent interview with Rajen Sheth, Senior Product Manager, Google Apps, posted unabridged here. In this interview, Rajen Sheth identified some of Google’s strategic directions as well as some of the key factors impacting Google’s success.
When Alaa asked Sheth if they were finding it difficult to migrate customers to Google Apps, Rajen admitted that it used to be very difficult, but things are rapidly changing. He stated: “Almost every CIO that I talk to is planning a cloud strategy and the value proposition of the cloud is very widely known at this point. For most corporations, now, it seems, it’s a matter of WHEN rather than IF they are going to move to the cloud for a lot of their core services…We are a serious player in most of the conversations we are having about messaging out there.”
Then Alaa asked Rajen about innovation at Google: “Google is well-known for its unwavering commitment to innovation…How is the process of innovation managed at Google”?
Sheth responded as follows: “Having worked in different companies, I could say that Google really operates in a very different way than a lot of organizations out there. It really operates in a way that spurs this innovation. I think there are a few elements to it. The first thing is that we are not afraid to look beyond what an existing space is all about right now, and so if you think about it, in many of the cases where Google has been successful, we’ve reinvented existing spaces … We take an existing space, not thinking about it in terms of how it is today, but what it should be, and how do we make it a brand-new experience”.
“Another big element to it is the notion of cloud computing, and that is actually one of the things that spur innovation. In many cases where you have to build packaged software, you are forced into a stream where you are releasing major updates every two, three or four years. The problem with that is that you have to think three, four-plus years in advance what is going to be the innovation that you want to push, whereas in reality, innovation happens all the time. With the cloud computing paradigm, we have it such that all our applications are centralized and we can update them incrementally, and that actually increases our innovation rate quite dramatically.
Finally, the Google culture definitely spurs innovation. The structure is very, very flat and people are encouraged to think, and to take risks, and think in brand-new areas. In fact, we have this philosophy that we call 70-20-10 and basically what it means, we put 70 percent of our effort in the core of our business, but we put 20 percent of our effort in new areas that are beyond the core business that we think might be fruitful. So we think beyond what is making money right now. Then we put 10 percent of our effort in completely off-the-wall things that may or may not see the light of day, may or may not be a great technology. There are definitely some great examples of technologies that have started out in that bucket and that have become some major areas for Google”.
I believe the discussion above clearly highlights the factors that will make cloud computing and cloud communications successful and will drive continued growth for Google itself. I will still caution, though, that the cloud is not for everyone – both on the supply and the demand side, but that is the topic of another post.
Written by Elka Popova - Visit WebsiteThis is the first post in a series of commentaries on the dichotomy of premises-based versus hosted/cloud communications.
Economic Realities Mandate a New Approach to Communications Investments
The global recession caused a lot of fear and uncertainty in all business sectors worldwide. As revenues declined, business customers had to curtail their spending, including communications and IT investments, in order to limit their losses. As a result of these actions, such businesses have not been able to benefit from recent advancements in UC, mobility, videoconferencing, and other next-generation communications technologies. Many customers are still holding onto outdated communications platforms that may still meet basic needs but can offer little in terms of productivity enhancement, greater customer satisfaction or competitive differentiation.
In the meantime, the competitive landscape in all industry sectors is constantly changing. The financially strong market participants are able to move ahead by re-enforcing their competitive advantage through technology investments and more aggressive marketing. The others should not wait until the economy reaches its peak again since, by then, it will be even more difficult to catch up with the market leaders. In fact, turbulent waters create favorable conditions for the more nimble and resourceful participants to advance more rapidly. As communications vendors and service providers struggle with the consequences of the recession, businesses can use their temporary weakness to negotiate better deals on pricing, features, and services.
Overall, the recent recession brought forward the need for a new approach to communications investments, also mandated by other economic realities such as the rapid technological evolution and the acceleration of business processes. It demonstrated that business customers should seek to deploy their next-generation communications infrastructure with the following factors in mind:
Flexibility: At times of crises, businesses recognize the value of greater flexibility in terms of access to resources, including communications capabilities. One of the biggest challenges during a recession is the need to downsize, which results in a lot of unused communications capacity in the case of premises-based implementations. Hosted services, on the other hand, offer businesses the possibility to discontinue lines and services as capacity needs change. Further, workforce reduction frequently impacts IT and telecom personnel as well, rendering the business unable to properly manage its infrastructure and avoid downtime, proactively update and upgrade capabilities, and so on. Alternatively, in a managed or hosted services scenario, a third party is compelled to provide adequate capabilities as part of its contractual obligation regardless of economic circumstances.
Speed to Market: As tough economic conditions force businesses to tighten their purses, they find themselves unable to quickly react to market opportunities. R&D activities slow down, marketing and sales staff shortages leave the door open for competitors to steal customers away, and communications infrastructure inefficiencies prevent overwhelmed employees from effectively collaborating internally and communicating with customers and partners. However, businesses that chose to leverage advanced communications to compensate for workforce reduction and macro-economic challenges are better able to maintain internal productivity and customer satisfaction levels. Outsourced communications and IT resources are more effective in providing access to required capabilities faster, with minimal or no initial cash outlay, and with the ability to adjust capacity on demand.
Risk Mitigation/ Risk Sharing: Businesses tend to become particularly risk-averse during an economic downturn. While suspending or postponing new communications investments help conserve cash, this is not a viable long-term strategy as obsolete technology cannot support evolving businesses processes and needs. A more sustainable approach would involve sharing the risk with a trusted partner. In a premises-based implementation, more flexible leasing and managed services offerings could help alleviate some concerns over excessive financial exposure. A hosted offering can, however, completely transfer the risk to a third party by eliminating most CAPEX and delivering capacity based on actual company performance and needs.
Risk mitigation is key in favorable economic conditions as well. In a booming economy, growing R&D investments drive even more accelerated technology advancements requiring more frequent upgrades and staff re-training in the case of premises-based implementations. Alternatively, the risks of technology obsolescence could be absorbed by a hosted provider in an outsourced communications scenario.
Focus on Core Competencies: Businesses and individuals are equally overwhelmed with the amount of information and expertise required to remain competitive today. Businesses are, therefore, finding they can grow more rapidly and improve their bottom line by focusing on their core competencies. As the complexity of communications technologies increases, it becomes even more compelling to partner with a trusted communications expert to ensure that the company’s infrastructure is properly deployed and efficiently managed without wasting valuable internal resources. A managed or hosted communication solution can enable customers to leverage advanced communications for a competitive advantage while focusing entirely on their core business.
Economies of Scale: As businesses grow and expand virtually through multiple remote sites and users, their communications infrastructure needs to evolve as well. Hardware-centric premises-based communications platforms are typically not very cost-effective for multiple small sites of less than 50 users. During periods of rapid growth, such solutions do not scale economically as they require new servers to be purchased, integrated and managed for additional capacity. A hosted service, on the other hand, allows a more gradual addition of incremental capacity based on the actual number of users. Also, it typically provides a uniform set of features, a common dial plan, a consistent customer interface (through a network-based auto attendant or IVR) and some other benefits to geographically dispersed organizations. Further, as businesses increasingly seek to connect with their customers, suppliers and partners, a hosted service can more effectively provide federation across disparate organizations.
Future-proofing Investments: The recession along with the accelerating pace of technology evolution are driving the need to future-proof investments in communications and IT infrastructure. Businesses need to ensure that their services and solutions are flexible and based on open standards so they can be integrated with other applications and platforms at deployment or in the future. Since SIP is becoming the de-facto industry standard, SIP-based, SOA platforms and SIP-based services offer a significant amount of flexibility and investment protection. Such solutions integrate with a wide range of endpoints and other SIP-based applications. Another important factor in future-proofing the communications infrastructure is to ensure greater redundancy and disaster recovery capabilities. Frequently, a hosted, SIP-based service can provide all these capabilities more economically than a premises-based platform.
Written by Elka Popova - Visit WebsiteIn my 10 years as a Frost & Sullivan analyst, hosted IP telephony has always been one of my most favorite coverage areas. I believe in the value of outsourcing core communications capabilities for certain types of organizations and users. I also believe that IP technologies have dramatically changed the value proposition of hosted voice as new hosted IP telephony offerings deliver a number of additional features and capabilities compared with TDM Centrex.
I have to admit, however, that, although I am gaining some insight into how cloud technologies can further elevate the value of outsourced, multi-tenant communications infrastructures, I have not yet reached an epiphany on that matter. In fact, I find the hype around “cloud”, particularly as it relates to real-time communications, somewhat exaggerated. Most people seem to think of the cloud as being synonymous with Skype and Google TO THE EXCLUSION of various other multi-tenant, IP-based architectures. They may be right, but in that case, I find the definition AND potential for business-grade cloud communications rather limited.
I am not currently equipped to provide a final distinction between cloud communications and hosted IP telephony, but I am working on a couple of studies with Vanessa Alvarez (check her out on Twitter) that aim to offer some good insights on specific advantages and disadvantages of both approaches as well as some perspective on the different market participants. In the process, I plan to post a series of blog articles on hosted and cloud communications drivers, challenges and trends.
I will follow up this post with a discussion of some economic realities that require a new approach to communications investments. In the meantime, I would greatly appreciate any thoughts on hosted versus premises-based as well as hosted versus cloud.
Written by Elka Popova - Visit WebsiteAfter several months of hard work, we have now completed the update of our World Unified Communications (UC) Markets study. The reason why I feel like celebrating (more so than after any other study) is because this market presents some unique challenges. Typically, we discuss and analyze markets by product or service category – e.g. the enterprise telephony platforms market, the enterprise media gateway market, the videoconferencing endpoint market, etc. But unified communications is all about … well, unification … that is, application integration. At the risk of repeating myself and stating what may be the obvious for some, here is how we define UC:
“Frost & Sullivan defines a unified communications application as an integrated set of voice, data and video communications, all of which leverage PC- and telephony-based presence information. UC applications are meant to simplify communications for the end user by making it easy to “click to communicate.” A unified communications application must contain the following:
- PC-based presence (online or offline)
- Telephony presence (on the phone or available for a call)
- Point-to-point voice calling
- Chat (i.e., instant messaging)
- Audio conferencing
- Web collaboration (application, file, and desktop sharing)
- PC-based video
- Find-me/Follow-me capabilities (for call routing)
- Unified messaging
A unified communications application may include the following:
- Mobile client
- APIs for easy integration with other applications
- Social networking capabilities
- Wikis/blogs
- Integration with room-based video conferencing
- GPS or other location information”
The past couple of years were challenging for communications vendors as the recession forced many businesses to suspend or delay investments in communications technologies. Tighter budgets limited the penetration of most UC applications. The telephony market was one of the hardest hit, as most vendors experienced double-digit year-over-year revenue declines. Conferencing applications and services fared better, as they allowed businesses to reduce travel costs while enabling virtual workers to communicate and collaborate more efficiently. Even conferencing markets, however, experienced increased price pressures, with the impact of the recession being most severe in conferencing endpoint markets and in the more mature audio conferencing services markets.
In 2009, UC vendors focused primarily on penetrating the market with advanced UC clients. IM and email vendors aggressively upgraded their customers to UC-capable IM clients and architectures. Similarly, telephony vendors bundled advanced softphones capable of integrating with IM clients and conferencing platforms with the rest of their telephony solutions to encourage adoption. While these vendor strategies help increase user familiarity with software-centric communications and their benefits, they are not strongly correlated with investments in the rest of the infrastructure required for a complete UC implementation. Customers deploying softphones from their telephony vendors did not always purchase the conferencing and/or IM/presence servers. Similarly, many customers who purchased Microsoft’s OCS Enterprise CALs did not choose to use OCS voice or to integrate OCS with the corporate telephony system.
Overall, we do not believe UC will be a big revenue source for the vendors (which is great news for customers!) That said, we believe it is here to stay. Vendors will give away UC clients to drive adoption of various advanced communications solutions – conferencing, collaboration, mobility – as well as telephony and IM infrastructure refresh. As business users become increasingly used to the convenience of certain UC capabilities such as soft clients, conferencing capabilities that are only a click away, affordable video, and so on, it will be difficult to take those away from them.
But who should customers turn to for their UC capabilities? There is no single right answer, of course. Two distinct business models have emerged: on-stop shops and best-of-breed integrations.
For SMBs, all-in-one appliances or application stacks are probably most appealing. However, few vendors are capable of offering, on their own, all the required functionality and features in the UC stack. Either the telephony component is still missing critical elements (such as E911), or the IM clients are not very feature-rich, or some other capability is lacking.
Larger customers with multi-vendor environments are better off selecting the specific applications that best meet their needs and then engaging their own (typically more extensive) internal staff or outsourcing the professional services expertise to integrate those capabilities in an end-to-end UC environment. Limited vendor interoperability along with scarce UC expertise will present some serious challenges to this approach in the near term but will become less of a concern in the future. Growing adoption of SIP and SOA and application enablement technologies, and vendor strategies focused on contextually-rich communications and communications-enabled business processes will have a major impact on vendor interoperability and will eliminate a great portion of the hassle and cost related to application integration and UC implementation.
Generally, UC adoption may remain limited to specific user groups (e.g. knowledge workers, marketing and sales people) for the next few years, until business models make it compelling for the average communications user to own a UC solution even if they are not using all of its capabilities and not benefiting as much as the early adopters.
Here are some recommendations to end users considering UC:
- Businesses should leverage their communications investment to gain a competitive advantage and should make new technology acquisitions with their key strategic objectives in mind.
- Vendors are engaged in a more fierce competition than ever before. Customers can exploit this opportunity to require exceptional value for their money.
- Customers need to future-proof their investment. They should seek to deploy open and flexible standards-based technologies. Further, they should demand extensive education and training on features and integration capabilities to ensure that they can easily switch among or integrate multi-vendor solutions.
- Customers should pay attention to their vendors’ and channel partners’ overall financial stability. The recession has weakened a lot of market participants and growing competition will further jeopardize their viability.
- Customers need to restructure internally to ensure they gain maximum value from their IT and telecom investments. They must ensure cooperation between the telecom and IT teams so they can effectively coordinate new investments and ongoing infrastructure management.
- Finally, customers should explore alternative delivery models (e.g. managed services, hosted solutions, etc.).
For more information on our study, please contact me at epopova@frost.com or review related material on our web site at http://www.frost.com/srch/content-search.do?srchid=194001017.
Written by Elka Popova - Visit WebsiteNortel’s bankruptcy and Avaya’s acquisition of its enterprise assets has caused uncertainty and fear among Avaya and Nortel customers and partners. Avaya recently presented its vision for the evolution of the combined product portfolio. I would like to hear from businesses, VARs, SIs, etc. about their specific concerns. Did Avaya’s roadmap alleviate some of these concerns or did it raise new ones? Which choices did you think were good? Which ones were wrong? Do you trust Avaya’s commitment to both installed bases and both channels? What would you wish to hear from Avaya? What strategy direction would best serve your needs?
As a Frost & Sullivan analyst I do not endorse any particular vendor. If you email me your opinions, I will protect your privacy and will only use your insight to develop an aggregate perspective on customer and partners sentiments.
Written by Elka Popova - Visit WebsiteI have just returned from an Analyst Event hosted by Alcatel-Lucent’s (ALU) Application Software Group – now comprising its enterprise applications development and sales team and the Genesys portfolio and organization. Besides being a highly entertaining event at a fabulous locale (Rosewood Sand Hill Hotel in Menlo Park), this gathering also provided analysts with a good perspective on ALU’s strategy for the UC and contact center spaces. ALU demonstrated its determination and ability to continue to lead in the communications markets with innovation, openness and strong financials.
The following are some of the takeaways from the event.
Transformation: For some time now, ALU has been sharing its vision for a necessary transformation in the enterprise, involving various technology and organizational changes. One of the aspects of this transformation process is the merger of enterprise and contact center technologies and business processes. With the merger of its enterprise and contact center teams into the ASG structure ALU is setting itself up for more targeted transformational product development and marketing. This organizational structure is unique (to my knowledge) and could enable ALU to more effectively develop and promote innovative capabilities creating new opportunities and expanding its addressable market.
For a long time, ALU has sought to leverage Genesys’ contact center success into the more general enterprise space, but has not been able to implement a powerful and coherent strategy to complement its vision. With the merger of the two teams and the prospects of cross-selling and up-selling customers across the enterprise and contact center markets, ALU may be on a path to finally bring its vision to fruition. Moreover, it may be able to set a trend in the communications market that will drive a transformation of vendor organizations leading to an accelerated convergence of enterprise and contact center infrastructures and decision making processes among customer organizations.
Some of the specific objectives pursued through its Transformation strategy include:
- Delivering expanded solution offerings
- Presenting one face to the customer
- Leveraging a wider choice of models
Some of the specific steps in the merging of the two silos involve the extension of presence and UC into the contact center and the ability for customer service interactions to extend into the enterprise pool of experts. This notion is not entirely unique to ALU, but all vendors are at the initial stages of developing the technologies and strategies to implement this vision. If ALU is successful in leveraging its new organizational structure to more efficiently market these new capabilities, it may be able to develop a sustainable competitive advantage as “the walls of the contact center start coming down” (as prophesied by ALU’s executives).
Application Enablement: Another message that ALU has consistently tried to convey to its customers and partners over the past couple of years is that of its application enablement efforts and capabilities. Application enablement has become a key element in communications vendor strategies as they look to integrate with other vendors’ applications in order to deliver greater value to their end users.
I need to take a step back before I discuss ALU’s application enablement strategy further. One of ALU’s perceived competitive advantages is the combination of carrier and enterprise product and service organizations. Since FMC has demonstrated little success to date and these continue to be two very distinct silos, I have wondered whether there were any true synergies between the two groups within ALU. As ALU revealed its vision for application enablement, it started to become more apparent about how the carrier and enterprise/contact center groups could leverage each other’s capabilities for greater success.
Here is how ALU defined its vision for application enablement bringing the carrier and enterprise application worlds together: “Consistent, Controlled, Open Access to Network Enablers in the Cloud”. For example, ALU’s idea of application enablement involves the integration of carrier applications with enterprise/contact center ones to enable capabilities such as enhanced caller profile (with presence, location, preferences from subscriber data, etc.) that can prompt an appropriate action by the respective business or organization – e.g. marketing and customer assistance at the right time and place. It also brings the mobile and enterprise experiences together by enabling mobile users to collaborate using multi-media capabilities on mobile devices. Overall, application enablement allows business users to participate in contextually rich, presence- and location-enhanced communications and collaboration.
ALU is working with partners to develop new applications and capabilities. It claims over 200 applications and about 10,000 developers in its Alliance and Application Partner Program.
Further, ALU’s vision for the convergence of the carrier and enterprise worlds is based on the anticipated growth in demand for hosted/cloud-based communications. It is readying its portfolio and service resources for a variety of scenarios – from fully premises-based to hybrid to fully hosted ones.
Main Technological and Strategic Tenets and Success Factors
ALU is looking to leverage a set of capabilities that can set it apart from other communications vendors. What end users and partners should take into consideration when evaluating ALU as a potential vendor or partner, include the following:
- It boasts some of the most open technologies in the marketplace, both on the enterprise and Genesys sides. It can deliver advanced communications and collaboration capabilities in a multi-vendor telephony environment. It is set on a technological evolution path leading to increasingly more open, software-centric solutions based on SIP. These capabilities make ALU a viable option for existing Nortel customers wishing to avoid a drastic rip-and-replace scenario, but looking to overlay some advanced capabilities on top of existing platforms or to prepare themselves for a transition to a new infrastructure in the future. Further, the openness and modularity of ALU’s technologies counter-position it against Cisco and its over-arching strategy of locking customers into an end-to-end Cisco architecture.
- In the UC market, Alcatel-Lucent (ALU) has positioned itself for competition both as a one-stop shop for a broad range of UC applications and a voice communication partner to the IM/presence vendors such as Microsoft and IBM. It provides the My Instant Communicator (MyIC) application (supported on its My Teamwork multimedia platform) that integrates telephony and online presence and can perform multiple functions. It can act as an IM client and a softphone interface to ALU’s voice communication and conferencing platforms; it can also invoke other IM clients such as IBM’s Sametime or Microsoft’s Office Communicator. ALU’s UC solution is modular and flexible allowing customers to deploy only the capabilities and respective servers (telephony, presence, conferencing, etc.) that they require with the ability to add applications and integrate them into the UC environment in the future. This architecture makes ALU a viable option for businesses with multi-vendor communication environments looking to deploy advanced conferencing and UC capabilities without replacing existing call control platforms.
- Further, ALU’s application enablement strategy and respective capabilities are likely to provide it with a competitive edge going forward as businesses look to integrate UC with mobile applications, contact center technologies, business processes and various Web 2.0 applications. Business decision makers will need to start evaluating communication technologies as a strategic investment in improving business processes and will, therefore, need to require their vendors to demonstrate an ability to integrate with other, existing or planned platforms and applications. ALU’s application enablement capabilities should be taken into consideration when selecting a communications vendor.
- With its carrier technologies and existing relationships, ALU is well positioned to drive carrier and enterprise convergence delivering similar or coherent applications across the two silos. In some scenarios, businesses may be able to derive significant benefits from hybrid cloud and premises-based communications infrastructure solutions. ALU will be well positioned to deliver both capabilities in a tightly integrated fashion.
- ALU executives stated that they intend to create new market opportunities and expand ALU’s addressable market. I believe they have a powerful vision and their success will depend entirely on their ability to execute. For that purpose, organizational structure and business practices related to the convergence of enterprise and contact center, carrier and enterprise groups, will need to be tightened. Greater focus on solution selling and customized transformational engagements with business customers will be key to success. Last, but not least, financial performance will need to improve in order to provide the company with greater resources to fulfill its vision.
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