| Hosted PBX |
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| Dave Dyer |
service is of a high quality and customer churn is very low.
As a vendor of hardware and software solutions, Siemens is unique in that it can operate in this area of the market. In addition, resellers can also invest in Siemens HiPath 8000, the SIP based carrier grade soft-switch which Industry Analysts Gartner placed in the "leadership" quadrant in their March 2005 soft-switch report. Resellers can deploy HiPath 8000 and also offer hosted IP PBX services from within their own network.
Andreas Benez, Business Development Manager - Service Provider IP Communications, Cisco Systems sees a growing market for managed and hosted IP communications. “As more and more organisations opt for an out-tasking model for their communication infrastructure, the move to a managed or hosted IP communication model is a natural progression. This shift towards out-tasking is opening new business opportunities for voice resellers and service providers alike. At Cisco, we see carriers, both alternative network operators and incumbents, as well as system integrators and channel partners all offering hosted and/or managed IP telephony services.
Through best practice gained from over 25,000 customers, Cisco has proven that IP communications technology is robust. The added advantage of a managed service is that customers also benefit from having pre-defined service level agreements with the service provider.
In a managed service, the call control infrastructure is located at the customer's premises and remotely managed by the provider. For the hosted model, the call control infrastructure is located at the data centre of the provider.
Demand for hosted and managed IP communications services will grow as businesses, especially small and medium sized businesses, realise the benefits of these services, such as cost advantages, future proofing and predictability of monthly service charges.
There is also another major benefit of having a converged IP communication platform. That is the integration of voice into other business applications and vice versa. Service providers can add value by customising solutions to meet the customer's business and communication needs. For example the development of additional applications based on XML or the integration of unified messaging into the organisation's overall communication infrastructure are building blocks that can be offered very effectively by a provider or channel partner in a managed or hosted environment. This makes it much easier for the end customer to benefit from the advantages of a converged IP communication platform."
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delivery media, to fully satisfy the customer requirements.
Customers also need to be assured that the added challenges of security and quality of service are satisfactorily handled. Companies will also need to consider what will happen should the hosted switch fail, perhaps investing in local equipment to ensure they retain a vital link to their customers, and also whether they will be able to change carriers in the future. Finally, for more complex call centres, Automatic Call Distribution (ACD) or Computer Telephony Integration (CTI) provided through a hosted service may not provide the flexibility that busy call centres demand, and smaller business may find that they do not have the flexibility to grow their solution as required.
Robin Hayman, Product Marketing Director at Splicecom says just take a look at the latest MZA figures. “IP PBX sales – AKA “tin” if you're from the IP Centrex world – are rising sharply in the UK, in fact it's the only area of the PBX market that is. However, with 50% of system sales still being traditional TDM – not even IP Enabled or a TDM/IP Hybrid – there's still a huge growth opportunity for IP Telephony. It's then down to customer preference; company purchase and in-house management versus rental and out-sourcing. Which is where the IP Centrex opportunity comes in.
Very small companies and small offices, mobile/homeworkers within larger organisations will all be key targets for Hosted IP Voice Services – as they were for traditional Centrex services. The Residential market is also likely to be key. However, where traditional hosted services offered reduced costs because of the on-net calling ability, the functionality they provided was minimal because the switches supporting the services were designed with US market requirements in mind. It's also worth noting that pricing of all types of voice services and equipment is far more aggressive on this side of the pond then it is in the States.
Tony Brook, Managing Director of Warwick based HipCom, has a channel proposition based upon the BroadSoft platform, “BroadSoft is an application based soft switch – it is a Class 5 -carrier class – service based application. It runs a Sun Solaris platform so is beefy and robust in terms of its architecture. We own two systems which are based in separate data centres in London docklands. The key feature on the BroadSoft platform is that it has different architectures for voice. It is a carrier class product that throughout Europe is being adopted by various PTT's. From a broadband perspective HipCom is agnostic other that to say that, depending on how a customer is using broadband, we would normally recommend deploting QOS across the circuit and to source this service from one of the top five suppliers.”
The new IP service offerings will deliver all the advanced features and functionality associated with IP-PBXs and IP Telephony, however, the key is likely to be how the services are tariffed. If the IP-Centrex providers don't get their sums right it's quite possible that we'll see the number of suppliers shrink long before the market reaches anything like its full potential. To make these figures “work” we're already seeing the return of lease plans up to five years (which are hard to enforce in a legal sense – just ask the mobile phone companies). Anyone out there old enough to remember Telephone Rentals? Certainly, Inclarity wasn't the first company to lay off a high percentage of its staff – and it's unlikely to be the last. And what happens when the biggest “IP Centrex” service of the lot – BT's 21 st Century network – starts coming on-line in 2007?
But let's look at the requirements of a typical Enterprise scenario. For the larger offices, in fact typically anything down to 8 extensions, an in-house IP-PBX is likely to provide the best balance of cost/management/flexibility. To include smaller offices and remote/mobile/homeworkers of these organisations, there's a choice between extending the IP-PBX facilities via VPNs or rolling out some form of IP Centrex delivery (providing its more cost-effective). The great news here is that IP promises to allow the customer to manage both implementations as one, sharing the same functionality, directories and applications – totally independent of how the service is provisioned and delivered to the desktop. If this particular flavour of IP Centrex can be realised it will make a powerful and compelling story for both customers and resellers alike.”
Peter Tebbutt, Marketing Director, UK and Ireland, Alcatel, “Depending upon the deployment and underlying network, hosted IP PBX solutions can be deployed to provide a robust solution. However they may prove too inflexible to support differing customer business models and end user requirements. It is clear that many organisations are still not ready to totally outsource or allow a third party to host all business critical telephony and may prefer a managed solution rather than a fully hosted solution. The decision to ultimately deploy a hosted or managed service, will be based primarily on the business model, followed by technology and feature support.
Alcatel's focus is to support business partners and service providers in helping customers decide whether their objectives would be best met by deploying a hosted or managed enterprise solution. In this way, service providers and business partners can really differentiate their offering, while also looking at how to add value by offering other hosted services/applications such as unified communications, connectivity and voice minutes.
Paul Beaumont, Group Sales & Marketing Director of Inclarity, “To the business environment the telephone can mean the life or death of a company, and justifiably the demand for a robust service is paramount. In an IP Centrex deployment, equipment located at the service provider's site is designed, built and maintained to carrier level reliability and scalability.
This specification ensures that the delivery of centralised services is the most efficient and cost effective delivery method. The centralised deployment delivers resellers with significant benefit from recurring revenues based on good margin telephony services, margin from off-net minutes and the additional network services, such as the broadband used to provide network access. These commercial benefits can only be delivered by a robust IP Centrex system. “
According to George Zaremba CEO and founder, alwaysON a s far as hosted IP-telephony is concerned, IP-Centrex is the only way forward for business and there is a great difference between hosted premises based PABX and carrier-class IP-Centrex. “There has been a flutter of hosted IP-PBX and IP-Centrex offerings, both from carriers and from PBX vendors.
PBX vendors obviously view hosted PBX as a segment of the market they must address and most have only tweaked the hardware/software. The benefit of a network based IP-Centrex is of scale and architecture, i.e. the difference is similar to that of a PC and mainframe. Overall, hosted PBXs provide minimal advantage over premises based PBXs except that the service provider has better scale of economy than the customer, so it really becomes an outsourcing proposition.
For example, a major drawback of most hosted IP PBX implementations is that they do not support a multi-tenant environment out of the box (support for multiple businesses on a single instance/box)—there are no economies of scale for hosted IP-PBX. If vendors did provide multi-tenant support out-of-the-box, it would undermine their business model.
A major side-effect of non-multi-tenant support is that company directories must be disabled, otherwise two or more companies sharing the same hosted IP-PBX will be able to see all internal directory information—a clear breach of the Data Protection Act, if nothing else. There are also problems with scalability—the inherited stepped number of users of IP-PBXs inevitably means the service provider must guesstimate demand together with its hosting and environmental costs. On the matter of physical robustness, most PBXs are designed for office environments and are not tested for carrier-class environments—I am not aware of any office PBX that is NEBS-compliant, for example. Some carriers engage in sophistry, implying two customers sharing the same PBX rack in the hosting centre constitutes multi-tenancy, when in fact it is two separate PBXs (or PBX modules)—one per customer--occupying the rack space.”
Dave Millet, Senior Manager, Services Offers & Marketing EMEA, Avaya Global Services says that according to some of the main industry analysts, the Hosted IP market is currently being over-hyped in terms of its growth and size. There are a number of reasons for this;
Firstly, although the SME market is one of the biggest market sectors for Hosted solutions, the overall uptake of IP in the SME base is very slow.
Secondly, the majority of customers (over 75%) seem to be taking a migratory approach to IP as opposed to replacing their entire infrastructure investment.
Thirdly, one of the key drivers for IP is the opportunity to run applications on the infrastructure -however Centrex has traditionally been focused on delivering generic applications with limited functionality. These factors collectively limit the IP Hosted market to either the existing Centrex market who ultimately migrate to IP Centrex, pure greenfield sites with no existing infrastructure investment to consider or complete technology refresh situations.
Zeremba, who has more than 200 customers in the UK, questions the commitment of some carriers. “Several carriers have made announcements about their IP-Centrex services, but as yet most are paper tigers. Level 3 Communications announced it would implement IP-Centrex in Europe early this year and then canned the service both in the United States and here. Cable & Wireless announced its so-called IP-Centrex service nine months ago. It has yet to announce a customer for the service.
Resellers should question carriers on their commitment to IP-Centrex as well as longevity of the service, a number of service providers having already fallen by the wayside. Resellers will be left holding the baby if the service is withdrawn, not the carriers. alwaysON has been offering IP-Centrex services for over two years now and in the early days there were a number of issues that have been fixed.
alwaysON's proposition to the channel allows our partners to set tariffs. This means margins of up to 30% for partners, whilst offering customers the most extensive features IP-Centrex offering available today. Partners receive recurring service revenues. Our partner owns the customer, not alwaysON.
Tebbutt at Alcatel, “Alcatel is already working with its business partners to provide a business model and solution that will enable them to offer a managed communications service (MCS) as part of a complete end-to-end offering for the enterprise. MCS can either be hosted or remotely managed, depending upon user and service provider requirements and optimum business model. The offering will include the OmniPCX Office/Enterprise, applications such as My Teamwork or My Phone, the Remote Service Center (RSC) platform, as well as additional services designed to reduce up-front investment and risk.”
Dave Millet at Avaya, “Ultimately, the key factor for the channel to consider when reviewing different vendors' propositions is flexibility; Depending on their overall capabilities, partners need to be able to either deliver the hosted solution themselves by white labelling an existing solution or to have the hosted solution delivered on their behalf. Similarly, it's important for the vendor to understand the difference between the SMB and the Enterprise market and have solutions available to satisfy both markets.
Lesley Hansen of TeleWare told us that she believed the market is set to become highly competitive and the channel propositions that succeed are likely to be those that offer easy to understand and use packages with sufficient flexibility of service offering to meet different customer needs. “These are likely to be targeted to particular vertical markets with value added services particular to the market – for instance an education market could include a text to speech forms capability through an intelligent IVR system to help to manage the surge of telephony contact during university clearing time, and this could be boosted during the period when needed and then dropped back when the rush was over.”
Tony Brook of HipCom, “Our core proposition is a wholesale model; we approach resellers that are seeking to own their customers and offer a white label service. It is important to note that we offer the full BroadSoft feature set for reseller to re-brand including VoIP, service and billing – not just the VoIP only that some people are offering the channel.
Resellers can buy wholesale hosted service from HipCom at £7.50 per user per month and resell at a price determined by themselves – typically we are seeing sales by our channel partners of between £17.50 to £25.00 per user per month. There is no investment required by the reseller other than attending a training day. My advice for resellers wishing to get in to this market would be to consider the offerings not just in terms of VoIP but also in terms of how it is provisioned and billed. Look at the platform and the service provided.”
Paul Beaumont of Inclarity, “The best channel proposition comes from a provider who can deliver a fully integrated service providing enhanced functionality, integrated service management, integrated billing, numbering with GNP, competitive off-net call rates, the network access capability and to complete the solution a comprehensive support programme. Inclarity, a registered licensed operator, is a provider of Business VoIP services, and has direct ownership of all of these entities from within. In comparison, competitors merely attempt to 'bolt' solutions together based on components from multiple suppliers with limited success.
Inclarity has a strong channel approach which is augmented by focused and targeted end user activity that is ultimately fulfilled by the channel. Inclarity's leadership and experience in the UK VOIP market, proven with the PIPEX and Affiniti partnerships, allows us today to be able to identify channel partners that will deliver in volume quickly. These channel partners represent the audiences we will focus on going forward.
Lesley Hansen again, “A number of vendors have looked at the hosted applications market and have pulled out. “As far as I am aware TeleWare is one of the few who actually have a solution up and running with users being added daily. I know Avaya recently made the decision to withdraw from this direct services market – the problem for the vendor is that it creates conflict between their product sales channel selling to service providers and their own service sales channel – this for many vendors is a risk they are not prepared to take since the majority of their revenue today comes from the product sales channel.
The second issue is that most vendors have absolutely no experience of running a hosted service based offering so trying to set up the support structure, operations, marketing and sales is expensive and outside of their experience – this is not the case for a company like TeleWare who have had a business class hosted service based offering since 1996 when we launched the first service with BT CellNet ( now O2) and already have over 22,000 users representing more that 60 companies on out hosted platform in the traditional PSTN world.
The transition for us from a PSTN/TDM based hosted offering to an IP/VoIP hosted offering - particularly since the services offered are based on the same telephony applications - is minimal. Even with the support team, billing and provisioning systems and 24x7 helpdesk already established the TeleWare Docklands facility has represented a substantial multi million pound investment for us in terms of hardware, systems and facilities, and the software costs have not been included in this figure since we are using our own iX softswitch and applications! To do this effectively and provide a resilient, telephony grade solution is a challenge, and unless the system is resilient and reliable the service will not succeed.”
An ISP, Mistral Internet's Hosted PBX solution is aimed at enterprises with anywhere between 50-1000 employees. “It is particularly suitable for those with multiple locations, like retailers or operations with many regional branches needing to be in regular contact. The service is also fully scalable for either smaller or larger businesses, allowing for the easy addition or subtraction of users,” says Mistral's Manager of Hosted Telephony, Michael Robinson.
“We chose to base our solution on the BroadWorks system because of its multi-site capability. Users can be deployed in a simple single site network, or distributed across a multi-site enterprise without impact to service functionality, capacity or performance. “Imagine having the feature-rich benefits of a next-generation IP phone system without the associated headache of having to install and manage a hardware PBX solution.”
“The system is SIP-based, allowing enterprises to choose from a broad range of standards-based phones, terminals, and gateways that best meet their budget and end-user requirements. Like all of Mistral's connectivity products, the system also offers full business continuity provision with the option of backing up the service to fully redundant data centres in two geographically separate sites.”
For its first Hosted PBX customers Mistral has been handling installations in-house. As the customer base grows third-party installation partners will be used to manage individual implementations on a tailored, case-by-case basis.
Robinson explains: “Technically, an installation is very simple and involves little more than plugging an IP phone into the LAN. Prior to implementations we ensure that the deployment is fully planned and tested so that the actual installation goes without a hitch. Planning activities will include capturing customer data/requirements, auditing of existing site infrastructure and the preparation and loading of configuration data. All implementations are backed up by a highly-powerful, centralised proprietary CRM system that sits at the heart of Mistral's operation, ensures that customer account issues and queries are handled swiftly and effectively. ”
Mistral will be offering the Hosted PBX solution into both its existing customer base and new opportunities. “Smaller businesses will be addressed through channel partners rather than directly by Mistral, and due to their relationships with existing PBX suppliers, we would seek to partner with an existing supplier to target larger businesses,” adds Robinson.
| Do-it-Yourself (DIY) | Remote Network Management | Managed Services | Hosted Services |
| Platform Location | Business Premises | Business Premises | Business Premises | Hosted by Supplier |
| Platform Management | Managed by Customer | Managed remotely by Supplier | Onsite/remote Supplier Managed | Supplier Managed |
| Supplier Engagement Level | Connectivity Services Only | Basic Management Services | Full Management Services | Full Management Services |
| Customer Engagement Level | ICT Staff fully involved | Customer in technical decisions | Customer in business decision | Customer only in business decision |
| Sharing of Platform | Customer Owned | Customer Owned | Customer Owned or Financed | Shared |
| Service Level | Low | Medium | High | High |
| Capital Expenditure | High | High | Medium or Low | Low |
| Opex | Unpredictable | Unpredictable | Predictable | Predictable |
| Ability to Upgrade | Medium | Medium | Medium | High |
| Customer Control | High | Medium | Medium | Medium |
