Enterprise Communications in 2011:Buyers Reveal their Top Priorities

Rob Arnold, Senior Industry AnalystMelanie Turek, Industry Director

Unified Communications & Collaboration

North America Information & Communication Technologies

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Agenda

Year 2010 Highlights• Hot Topics • Notable events

End User Survey• 2010 North America Communications & Collaboration Products and

Services• Mapping Hot Topics to Survey Results

• Mobility, UC, Conferencing, Video, Social Media, Collaboration, Best of Breed vs. Single Source Solutions

• Drivers and Restraints

Frost & Sullivan Conclusions and Forecasts

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2010 UC&C Market Highlights

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UC&C Hot Topics in 2010

Hot Topics • UC&C markets are exciting again• Cloud, CaaS/Hosted UC, mobility, tablets, video, virtualization, enterprise social

networking, CEBP, multi-vendor interoperability

Notable Events• Cloud: Microsoft 365, Cisco HCS, Oracle Sparc, Juniper, SAP, Amazon• Mobility: Android, iPhone• Tablets: iPad, Cisco, Avaya, many others • UC: Lync launch, Lotus Foundations Reach• Social Networking: Siemens Enterprise, ALU/Genesys, Cisco• Consolidation: Avaya-NT, Cisco-Tandberg • Interop: UFIC creation, telepresence, Avaya, Alcatel-Lucent, others• Video: Polycom, LifeSize, RADVISION, Vidyo, others• CEBP: Siemens OpenScape Fusion, InIn IPA• Virtualization: Mitel, Aastra, Siemens Enterprise, others

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End User Survey Scope

Demographics of Survey Participants

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End User Survey Scope

2010 North America Communications & Collaboration Products and Services

200 companies across US & Canada

Company Size: • 21% have 500+ employees• 79% have less than 500 staff

Industries:• Healthcare, Financial Services, Hospitality, IT/Telecom, Retail, Public Sector

• Each approx 16.5% of total

Budget allocation: • Half of participants say IT budget (servers, storage, networking) <30% of total expenditure • Half of participants say UC&C budget is <20% of total expenditure

Status of deploying UC: • 30% have already; 28% in process; 4% planning/evaluating; 18% have no plans

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End User Survey Scope (Cont’d)

CEO48%

CFO7%

COO5%

CTO5%

CIO20%

CMO2%

VP/Manager of IT/Telecom

13%

Survey Participant Titles/Roles

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End User Survey Scope (Cont’d)

Survey Participants with Large Focus on UC Strategy

21%

12%

28%

14% 15%

12%

Healthcare FinancialServices

Hospitality IT/Telecom Retail PublicSector

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End User Survey Scope (Cont’d)

0%

10%

20%

30%

40%

50%

60%

Survey Question:Which of the following communications and collaboration products or services are currently used within your organization (by employees)?

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End User Survey

Mapping Marketing & Development Trends to End User Feedback

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UC Clients and IM

UC Client 62% use extensively company-wide,

33% mainly by senior management

IM71% use extensively company-wide,

23% mainly by senior management

90+% think IM and UC clients are important, use meets expectations & will increase/maintain usage next year

Top benefit: improve collab across dispersed teams

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Mobility

Mobility is HUGE

70% use mobile extension extensively across company

91% say mobile extension is important • both large and small/mid accounts• highest rating in retail; lowest in IT/telecom

All sectors plan to increase mobile extension use or maintain capacity in next 12 months

• Drivers: work/life balance, customer service, collab across distributed teams

94% plan to expand or maintain current use of cell/mobile phones

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Conferencing

Use Importance 12 month plan Top Driver

Audio 65% extensive company-wide

32% mainly senior management

60% very

34% somewhat

51% increase use

42% maintain use

Reduce cost

Web 65% extensive

30% mainly senior management

60% very

33% somewhat

52% increase use

40% maintain use

Improve work/life balance

Video 54% extensive

40% mainly senior management

62% very

35% somewhat

49% increase use

45% maintain use

Accelerate decision making

Tele-Presence

67% extensive

27% mainly senior management

58% very

38% somewhat

54% increase

40% maintain

Environmental goals

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Interoperability

Survey Question:How would you describe your communications infrastructure today (from a

communications software point of view)? Large Accounts Small/Mid

Multi-vendor & not integrated 48% 50%Tightly integrated multi-vendor 45% 25%End-to-end single-vendor 7% 26%

Survey Question:How would you describe your communications infrastructure in 24 months (from a

communications software point of view)? Large Accounts Small/Mid

Multi-vendor & not integrated 29% 42%Tightly integrated multi-vendor 60% 30%End-to-end single-vendor 12% 28%

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Virtualization

Adoption Status

• 32% have virtualized solutions; 25% are in process; 14% considering; 5% planning to deploy in next 12 months; 18% have no plans

• Highest penetration in financial services, hospitality, IT/telecom sectors

• Lowest in retail and public sectors

• 56% claim their virtualization administrator has influence on deployment; 26% have no such employee

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CaaS, Hosted UC&C

44% of surveyed companies use hosted services

Hosted Trends:

• 73% said hosted services utilization increased in past 12 months

• 76% anticipate utilization to increase in the next year

• 40% are likely to implement; 13% likely will not implement in next 12 months

Top 5 Hosted Drivers:1) Greater flexibility for growth/downsizing2) Eliminate cost, hassle of multivendor integration3) Lower TCO compared to CPE4) Faster access to advanced capabilities5) Re-assign current IT/telecom staff to other tasks

Top 5 Hosted Restraints:1) Prefer to maintain full control2) Significant investments in CPE3) Too costly4) Security concerns5) Existing IT staff better understands needs

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CEBP

Survey question:

What is the status of integrating UC&C capabilities into business process software such as CRM, ERP, HR apps?

• 29% of total have • 24% in process, 18%

considering, 21% not planning• Highest penetration in

healthcare, financial services, IT/telecom sectors; lowest in retail and public sector

CRM/ HR/ ERPapps

Line of Business software

UC&C

CEBP

CEBP = Communications-Enabled Business Processes

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Social Media & Teamspaces

Large and Small/Mid customers use & view social media tools consistently

• 67.5% use extensively• Top driver: improve customer service• Top restraint: lack of user training

Team spaces usage & perception similar among Small/Mid and large accounts

• Used extensively by 60%, 33% mostly by senior management• Top driver: Increase collab across distributed teams; • Top restraint: implementation difficulty

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Frost & Sullivan Conclusions

Mapping Trends to End User Feedback and Forecasts

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Frost & Sullivan UC&C Conclusions

Macro FindingsApprox half of businesses surveyed expect budgets to stay the same in next several years.

Nearly half expected budgets to increase. Very few expect further cuts/decrease.

Businesses intend to invest in UC&C solutions to:• Reduce cost compared to current capabilities• Improve collaboration• Increase productivity• Improve work/life balance• Enhance mobility • Reduce travel

Survey participants indicated that they intend to increase their spending across all of these technologies starting in 2011.

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Frost & Sullivan UC&C Conclusions

Tablets in the enterprise• Used mostly for work & in the office space will reach 600K in 2010

• This is almost 5% estimated of total tablet shipment in 2010

IP PBX market share• Avaya will retake #1 market share position for IP PBX lines shipped worldwide

• Avaya approx 7 million vs. approx 5.6 million for Cisco

Interoperability and support• Customers expect more tightly integrated multivendor solutions as well as to deploy more

single vendor solutions• This will allow greater reliance on in-house staff for support

CEBP• Recent research indicates immature market, with solutions ill-defined• Lack of uniform definition makes measuring adoption extremely difficult• Customers interviewed have mostly small & pilot projects

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Frost & Sullivan UC&C Forecasts

Audio Conferencing • World tabletop endpoints revenue CAGR (2009-2015): 16.9%• World installed endpoints revenue CAGR (2009-2014): 11.2%• World bridges revenue CAGR (2010-2016): 11.2%• North America services revenue CAGR (2009-2016): 2.6%

World Web Conferencing and Collaboration Market • $1.70B market in 2009 forecast to reach $4.12B by 2014• 5 Year CAGR of 19.4%. (includes web conferencing hosted services, on-premise web

conferencing, web events, and remote support markets)

World Videoconferencing Systems and Services • $2.25B market in 2009 forecast to reach $5B by 2014 • 5 Year CAGR of 17.4%

North America Enterprise Telephony Implementation & Management Services• revenue CAGR (2009-2016): 1.8%

World IP Desktop Phone revenue CAGR (2009-2016): 2.1%

World IP Telephony Line revenue CAGR (2009-2016): 3.5%

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Appendix

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For Additional Information

Jake WengroffCorporate Communications(210) 247-3806jake.wengroff@frost.comTwitter @JakeWengroff

Craig HaysDirector of SalesInformation & Comm Technologies(210) 247-2460chays@frost.com

Melanie TurekIndustry Director(970) 871-6110melanie.turek@frost.comTwitter @melanieturek

Rob ArnoldSenior Industry Analyst(770) 436-7329robert.arnold@frost.comTwitter @rwa_ca