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Whitepaper
BroadSoft Cloud
Overview
Communications service providers (CSPs) are currently
forecasted to dominate the market for business voice
service, fully reversing a market historically owned by
premise equipment vendors, such as internet protocol
(IP) private branch exchanges (PBXs) and key telephone
systems (KTSs).
PBX and KTS vendors have long held an advantage
in business voice communications. In 2010, 96.4
percent of business end points connected to PBX/
KTS equipment, and “hosted PBX” represented only
3.6 percent of lines shipped. Global revenue for
PBX systems and handsets was a healthy $8.1 billion
, driven by economics (long CapEx depreciation
schedules and relatively simple operational support)
and innovation (a less complex single-tenant
environment).
A growing demand for advanced unified
communications (UC) functionality and improving
cloud delivery models are projected to drive CSP
market share quickly past that of PBXs. In fact, CSPs
are expected to outsell PBXs because of reversal of
advantages in economics and innovation.
Figure 1 . Historic Innovation
Lead for PBX Vendors
Communications service providers worked around
PBX’s advantages by offering a mix of utility-oriented
user voice services for select business segments
and a breadth of trunking services for premise
equipment.
Advantage – Communications
Service Providers
Advances in cloud computing and other major trends
are rapidly changing the business voice market. CSPs
now have the opportunity to “leapfrog” PBX vendors by
selling a far more compelling service offering: Unified
Communications as a Service (UCaaS).
According to a May 2014 MarketsandMarkets report,
annual global revenue for UCaaS will total $23.34 billion
by 2019. Ovum offers a similar forecast, anticipating
that the global market for “managed and hosted IP
voice services” will grow from $9.7 billion in 2013 to $25
billion in 2019.
Figure 2. Cloud Impact for
Business Voice
First, cloud computing and delivery models lower
operational overhead, and therefore total cost of
ownership, through vastly more efficient centralized
delivery of voice services. This reduces relative costs
for CSPs and their customers. Second, important
innovations and productivity gains now revolve around
mobility-focused applications and integrations to both
third-party UC systems and cloud services—an area
to which CSPs bring greater resources and are able to
deliver more powerful solutions.
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“Companies are moving from on-premise infrastructure
to a cloud-based unified communications model,
for cost savings and for more service options,”
MarketsandMarkets reports, citing the advantages
of pay-per-need/pay-per-use, reduced travel, cost
effectiveness and services that extend across sites. A
March 2014 study from the Synergy Research Group
shows that businesses that are switching from IP
PBX are selecting UCaaS at a far greater rate than
traditional hosted business VoIP.
UC offers clear benefits to CSPs. UC functionality, as
a central part of a UCaaS offering, drives more CSP
revenue by enabling a greater net volume of lines or
subscribers, greater ARPU per line and greater sales of
auxiliary services, including bundled access circuits and
network services. And CSPs are choosing UCaaS.
According to Synergy Research, in the fourth quarter
of 2013, 8x8, ShoreTel and RingCentral accounted
for a combined 36 percent of the UCaaS market. “A
fascinating battle is playing out between traditional
telcos on one hand and much smaller specialist
operators and technology vendors on the other,” said
Jeremy Duke, Synergy Group founder and chief analyst.
“Clearly UCaaS is going to carve out an ever-greater
share of the managed and hosted business voice
market, and at the moment the telcos are being very
slow to respond.”
BroadSoft believes that CSPs can not only respond
to specialist operators, but ultimately surpass them
by leveraging brands’ core competencies in customer
support and solution engineering and cloud delivery’s
importance in customer decision-making. This paper
explores the general factors driving the adoption of
cloud delivery, challenges and innovations specific
to cloud UC and strategies and options for CSPs to
achieve a leadership position in the evolving business
voice market.
Figure 3. Managed and Hosted
Voice Growth by Segment
UCaaS offers CSPs battling increasingly fierce
competition for basic telecom services the opportunity
to differentiate and build margins through tailored
services for horizontal (such as SMB and mid-market)
and vertical (such as legal and healthcare) markets.
Considering the size of the existing PBX market, a
UCaaS investment in areas such as sales, marketing
and operations offers promising returns.
Factors Driving the Adoption of
Cloud Delivery
The more than 10-year migration to cloud delivery
initially began with applications such as email and web
hosting. These applications benefitted from improved
performance when operated in a network and lower
total cost of ownership with the offload of capital
investment and operating overhead. Today, customer
relationship management (CRM) and enterprise
resource planning (ERP) systems are moving to the
cloud delivery model to take advantage of reduced
wide area network (WAN) bandwidth costs, increased
data transmission speeds and improved access to the
high speed data connectivity that meets user demands
for greater mobile access.
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Business subscriber and UC voice services are among
the last applications to move to cloud delivery, and
CSPs need to be prepared, especially with strategies
around cloud delivery economics and rapid innovation.
The more effectively CSP leaders understand these two
factors, the better equipped they will be to prepare
offer requirements, development plans and investment
strategies.
Figure 3. Cloud Delivery Framework for
Unified Communications
General Economics of Cloud
Delivery
The cloud model achieves economic benefits for CSPs
and their business customers in seven primary areas:
1. Hardware utilization rates
Cloud delivery, which shares hardware across multiple
applications and customers, can help achieve annual
utilization rates of close to 100 percent, compared to
the average utilization rates of 5 percent to 20 percent
offered by traditional servers that typically run only one
application/workload. The economies of scale cloud
providers achieve in hardware utilization across diverse
workload schedules, types and geographies enable
them to offer innovative pay-as-you-grow or pay-peruse models to their customers.
2. Energy costs
Currently, an average data center with traditional IT
infrastructure achieves a power usage effectiveness
(PUE) level of 2.5. PUE measures the ratio between
the total power delivered into a data center and the
critical power required to run the servers. A data
center using a cloud provider with its own large, heavily
invested data center, by contrast, reports considerably
lower PUE values. The increased power efficiency
and decreased power costs per unit of cloud delivery
give companies the opportunity to significantly lower
the amount they spend on energy to run their IT
operations.
3. Reliability costs
Cloud delivery can also dramatically reduce the costs
of running a highly reliable, always available, disasterready IT infrastructure on its own. Doing so requires
companies to own and maintain reliable storage and
backup devices, redundant networking devices and
connectors between data centers—in addition to a
tested and working solution for disaster recovery. By
deploying these functions to the cloud, companies can
achieve the reliability and disaster readiness they need
with significantly lower expense and complexity.
4. Security costs
A move to the cloud similarly reduces IT security costs.
On their own, companies spend significant sums to
protect data integrity, confidentiality and availability
from continuously changing and increasing security
risks, incurring capital expenditures for network
security, software licensing, dedicated IT security
personnel, regulatory compliance and physical security
requirements. Cloud providers are able to reduce
these costs, while still offering dedicated security
expertise that adheres to industry best practices, by
leveraging their economies of scale.
5. Personnel efficiency
By eliminating the need to dedicate labor costs and
hours to such activities as network maintenance,
data center design and build, hardware procurement,
upgrade installation and security, cloud delivery
enables more efficient use of IT personnel.
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6. Agility costs
Building, extending or turning down infrastructure
requires significant resources, which can cause
companies to miss opportunities or move too slowly.
Cloud delivery allows companies to address needs
immediately as they arise and become more agile,
more responsive and ultimately more productive.
7. Planning and strategy costs
Along with cost savings and enhanced services, cloud
delivery promises greater simplicity. A traditional IT
system is typically burdened with complexity—such
as vendor evaluation processes, deployment issues,
roadmap concerns, hidden costs and unforeseen
scalability limitations. Cloud-based services, however,
are available in more discrete packages with more
concrete service descriptions and transparent pricing.
By offering companies what they need when they
need it—and not charging for anything more than the
necessary services—the cloud greatly reduces this
complexity and its associated costs.
Businesses are already realizing the benefits of the
cloud service delivery model. In a cloud.com survey
of IT decision makers, 68 percent reported hardware
savings, 66 percent were able to deploy infrastructure
more quickly, 57 percent reduced their systems
management burdens, 51 percent saved money on the
ability to scale up and down as needed and 42 percent
saved on automation capabilities.
As cloud technology continues to advance and IP
connectivity continues to deliver more speed and
stability at lower costs, the efficiencies will drive more
CSPs and business customers to the cloud delivery
model. In fact, many applications will only exist in a
cloud model. The success of applications launched as
cloud-only, such as LinkedIn and Twitter, disproves
several key objections—specifically scalability and
security—to cloud delivery. These applications have
shown how cloud-based applications can support
hundreds of millions of interconnected users, provide
needed security for business markets and offer a
quality user experience.
Communications Service Providers
(CSPs) and Delivery of Business
Voice
Businesses are finding the cloud delivery model
attractive for communication. Both voice-only and UC
services are being deployed via the cloud at a rate that
exceeds PBX line sales. This preference stems from the
increased operating cost and management complexity
of premises-based (IP) PBXs. UC greatly increases the
cost and complexity of PBX-based service delivery, and
more businesses are looking to CSPs for cloud-based
alternatives.
CSPs have launched exploratory programs to bring
hosted or cloud UC offerings to market. This includes
BroadSoft’s work with CSPs to integrate BroadWorks
IP voice switching with UC applications such as IM&P,
video calling and directory management.
While the integration of voice and UC applications is
functionally straightforward, BroadSoft has observed
some CSP struggles. In particular, development and
the commercial launch projects were delayed when the
integration of multiple communications applications
created downstream complexity across BSS/OSS
operations and required unplanned development.
These UC project experiences caused many CSPs to
reexamine how they deliver UC services. BroadSoft
determined that CSPs needed a more effective way to
bring UC services to market. The answer: bring CSPs
a new UC delivery platform one that leverages a CSP’s
strong brand, offers a streamlined product launch, and
enables rapid innovation that surpasses UC vendors in
the IT and PBX markets.
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Requirements and Challenges for
Delivering Cloud UC Services
A root cause of many UC commercialization challenges
is downstream operational complexity such as
provisioning and billing. To analyze and understand
this downstream complexity, BroadSoft broke CSP
operations apart into commonly understood elements
and worked with CSPs to understand the requirements
and challenges of each component.
2. Service delivery: activation, installation and
connectivity
Once an order has been accepted, its components
are converted to provisioning instructions. These
instructions perform functions like turning on call
control features , IM&P and other UC service elements.
Activation messages are sent to multiple service
delivery systems. Instructions include user, group
and account IDs and package details, and additional
tags (such as an “on-call” display within a contact’s
“presence” icon) are used for interworking between
different service delivery systems.
CSP preparation at this stage includes:
• Equipment for delivery, installation and activation
Figure 4. Breakout of Typical CSP
Operations
1. Sales and order management: order entry,
management and processing
UC requires an integrated service experience,
beginning with the ordering of services and preparation
of orders for provisioning. For this, CSPs need order
entry systems that can consistently present and
manage, from different back-end systems, product
components such as subscriber feature packages,
phone types, minutes plans, mobile device OSs and site
locations—while combining these elements to form
user IDs, group IDs and account IDs or map to APIs
with external platforms. Order management systems
need to be able to manage these data components
consistently through the process of service quoting,
order refining and service provisioning. Order
management also need to accommodate software
updates and new feature functionality from external
systems and respond to business changes such as
adjustments to pricing, packaging and service bundling.
• Updated device firmware versions for phones and
any additional equipment, such as routers and
switches
• Device and client configurations for application
on top of firmware, allowing for cost-efficient and
simplified service turn-up
• Accounts for telephony services, LNP requests
and any other regulatory elements that need to be
activated and correctly associated with user, group
and account IDs
CSPs also need to activate feature packages for users,
groups and accounts in multiple dimensions, including
portal access for admin users. They also need to
correctly coordinate multi-tenancy across service
delivery systems. For certain group level services, “silo”
rules might need to be engaged to prohibit visibility and
the interworking of certain features across different
customer businesses.
During installation, service connectivity must be
validated across all service delivery platforms. Call
quality tests at target office locations can provide
a support baseline for streamlining service calls
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during commercial operations. Testing should involve
extended flows of real-time media traffic to ensure the
minimum necessary LAN and WAN environments for a
high-quality calling experience.
3. Capital infrastructure: call control, media
mixing, voice and instant messaging and more
UC services are delivered through a combination of
call control systems, media mixing equipment, IM&P
servers, SBCs, firewalls, load balancers, web services
platforms and phones—the systems that drive featurefunctionality across phones, mobile clients and web
portals. Standing up this combination of systems
involves a high commitment of both capital and
staffing.
The process begins with service definition, typically
the documentation of the target service offering, end
customer value proposition, sales strategy, market
and risk environment, capital commitments, product
architecture and anticipated ROI. Determination of this
information usually requires a cross-functional team
and broad organizational support.
CSP teams then begin RFx processes, vendor selection
and contract negotiations. Once infrastructure has
been procured, IT staff begins integrating service
delivery systems with the BSS/OSS infrastructure
and refining and documenting business processes.
Functional testing on individual systems is followed by
the testing of integrated systems, the end-to-end test
and finally the complete systems test and business
process refinement and documentation.
The multiple systems, devices, and service elements
required to commercialize UC services often raise
overhead and extend the delivery timeframe,
increasing the risk that services will be off the mark in
terms of user trends and the offering’s novelty.
4. Customer service: training, tier 1,2,3+ support,
field teams and troubleshooting tools
As an extension of voice services, UC services are
considered mission critical. Users expect reliability
levels closer to the “5 x 9s” of a voice service rather
than the “3 x 9s” of a cloud IT application, and
customer support for UC services brings together
many elements: network connectivity, voice services
and business productivity applications. These multiple
service components can make training, support,
servicing and troubleshooting more demanding for
CSPs. Furthermore, interworking between systems
introduces new variables, and the source of issues
can be harder to identify across a range of system
elements.
CSPs with experience in business voice services may
be in a better position to extend customer service
capabilities to UC than service providers who are
familiar only with network connectivity or business
productivity applications. Yet, regardless of existing
customer service strengths, the preparation to
introduce UC services requires time and resources.
CSP teams need to plan upfront training for customer
service staff, new employees in internal support and
other additional staff. The greater a CSP’s investment
in up front elements such as media handling, online
training tools and online portals, the less likely it is to
be burdened by support issues.
5. Finance and billing: service data aggregation,
compilation, invoicing and collections
Billing systems pull in data on subscribers, assigned
packages and variable usage totals, such minutes
of use from multiple service delivery and mediation
platforms. Invoices are calculated based on contracted
rates between the CSP and business customer. Many
of the challenges with billing UC services result from
the variety of package options: moving users between
different package options, providing billing options to
manage disputes and customer service issues, and
exploring new options that respond to consumption
preferences.
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In order to simplify sales, marketing and billing, many
CSPs offer—and many SMBs prefer—service bundles.
Bundles also present a compelling option for the
enterprise market; however, enterprise customers
with more sophisticated procurement groups may
need billing structures with broken out service
components. Therefore, CSPs will require considerable
billing flexibility if they plan to serve a mix of SMBs and
enterprise customers.
BroadSoft Works with CSPs to
Offer BroadCloud: Offloading UC
Complexity
Because the bulk of a CSP’s challenges reside in
downstream operations, BroadSoft works with CSP
partners to create a solution that combines cloud UC
infrastructure with targeted downstream operational
elements. This solution, BroadCloud, connects the
BroadWorks platform to surrounding infrastructure
and operations to offload both initial and ongoing
development and maintenance costs. BroadCloud
enables CSPs to leverage key branded, customer-facing
and operational assets—such as sales and marketing
resources, customer service operations and wholesale
termination networks—at natural handoff points.
This model enables CSPs more rapidly innovate and
expand sales.
Using the operational elements shown in Figure 5,
BroadCloud delivers CSPs the following functions:
Order management and processing: This includes
portals for e-commerce (tools for a services catalog,
CPE, pricing, promotions, discounting and customer
site qualification), order management (to create, edit
and cancel orders and check customer credit) and
channel management.
Service delivery: This includes service provisioning
such as order certification and processing, delivering
APIs for things such as CPE staging and shipping
to the distributer/VAR, IP and wholesale VoIP
interconnect, and LNP number assignment and
porting.
VoIP switching equipment: This includes
BroadWorks call control, BroadWorks UC servers,
BroadWorks mobile, tablet and desktop clients, and
session border control ports and policies.
Tier 2 and customer service: This includes portals
for managing PacketSmart QoS LAN and WAN issues
identification and customer service moves, adds and
changes.
Billing data aggregation: This includes APIs for
providing CSP billing systems with billing data
covering user packages, group/virtual packages and
CDR mediation.
This approach frees service providers to focus on
the critical activities of sales, solution engineering,
customer support and customer service. Moreover,
much of the complexity of BroadWorks is concealed
behind simple, intuitive, branded portals and rich
system APIs, as shown below.
Figure 5. BroadCloud Partner Model
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UCaaS sales numbers. Channel Partners Telecom
concluded that, with growth exceeding 25 percent
year-over-year and possibly still accelerating, CSPs
should consider the value of going to market quickly
with UCaaS.
This mix of infrastructure and operations not only
benefits the time-to-market for initial deployment,
it also speeds the rate of ongoing innovation. For
example, CSPs can now provide new features with
an associated catalog entry, provisioning trigger,
needed client functionality and relevant billable data. A
rigorous testing and QA program ensures that updates
are carried out with little to no disruption to CSP
operations and the service experience. They also need to understand the potential of lost
revenues due to delays in customer acquisition,
extended time to market, missed market
windowsunder increasing competitive pressures. Figure
8 compares a product launch taking three months
with one taking 18 months. In this high growth market,
the sales impact of missing the UCaaS launch window
could be severe.
Communications Service Provider
Strategies
In the May 2014 article “UC Sales Destroying PBX
Market,” Channel Partners Telecom reviewed recent
Figure 8. Subscriber Growth and Revenue
Impact of Delayed Time-to-Market (TTM)
BroadCloud’s streamlined onboarding process—in
which CSPs leverage key brand, customer service and
support assets—enables a rapid time-to-market. Goto-Market (GTM) support throughout the onboarding
process ensures a more effective launch, helping
CSPs target horizontal and vertical segments, position
key features and functionality for specific buying
requirements and business communications needs.
Figure 7. UC Applications Revenue,
Year-over-Year
Meanwhile, a structured approach to market planning
and a comprehensive strategy can help CSPs take
full advantage of a UCaaS offer to drive additional
gross revenue—for example, positioning a broader
suite of cloud- or directly delivered services around
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UCaaS. CSPs have many avenues through which to
attack the UCaaS market, and BroadCloud addresses
the key blockers, including time to market, back office
complexity and cost, giving CPSs the ability to rapidly
launch a compelling UC package that integrates into
CSP customer-facing assets.
The continued turn-down of premise-based PBX
systems in favor of cloud delivery models and UC puts
a wide range of options at CSPs’ disposal. Whatever
options they pursue, CSPs need to move quickly to take
advantage of UCaaS, the service innovation that now
gives network-based solution offerings the opportunity
to compete and win.
http://rad-info.net/2014/07/24/the-ucaas-business-right-now/
http://www.telecomreseller.com/wp-content/uploads/2013/09/Hosted-PBX-Sales-Growth-by-Year.jpg
http://cti.tmcnet.com/news/2011/11/28/5958224.htm
http://www.marketsandmarkets.com/PressReleases/ucaas.asp
https://www.srgresearch.com/articles/ucaas-penetration-managed-hosted-business-voice-grows-where-are-telcos
http://www.channelpartnersonline.com/news/2014/05/research-reveals-uc-sales-are-destroying-pbx-mark.aspx
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