Simplifying the On-prem Payment Model

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We’ve been watching the growing popularity of cloud-based business communications and the associated recurring, operational expenditure (OPEX) payment model. The budgetary advantages are clear. With an OPEX model, a business avoids the up-front expense of purchasing and installing on-site equipment, and instead, pays a predictable monthly fee to access the communications solution as-a-service. Additionally, with unified communications “as-a-service” (UCaaS), fewer technical personnel are needed as there is no on-site communications system to manage and maintain. There are strategic benefits too, particularly for multi-site and larger organizations. These include scale, disaster recovery, consistency across a network of locations and the ease of adding innovations and technologies that emerge in the future (more on these here).

Paying a monthly fee is the norm for a hosted/cloud service, but it is not common when it comes to purchasing an on-site telephony system. And, though cloud-based communications is steadily gaining adoption, many businesses today still maintain or require on-site IP-PBX, contact center, messaging, meeting and UC solutions (more here on several new IP-PBXs introduced already this year).  With these businesses in mind, traditional telephony equipment vendors are looking at ways to simplify the buying process for customers that opt for an on-site installation. They recognize the appeal of subscription-based pricing and are introducing new payment models that apply to both cloud and premises deployments.

Moreover, most traditional equipment vendors are simultaneously building out a cloud UC portfolio, and thus, are uniquely positioned to offer hybrid arrangements with a mix on-site equipment and cloud-based services – a growing preference, according to recent surveys, and a good migratory step to an all-cloud solution in the future. A consistent cloud and premises payment model will make this inevitable migration to the cloud a smoother process.

Below, we highlight several telephony equipment vendors on our radar that are already offering subscription-based pricing for their premises-based telephony systems similar to the recurring, OPEX payment models of their cloud-based UC alternatives. We can expect to see more of this as 2017 unfolds.

Accent Communication Services

Early in 2017, national telecommunications provider Accent expanded its portfolio with a new premises-based IP-PBX called Accent VoiceONE Onsite. Accent, in a sense, is bucking the trend by introducing new on-site equipment when most providers and vendors are racing to build out their cloud UC offers.  Yet, the company, which has been a cloud-only provider of business communications services for years, has found that not every business is ready for the cloud. And so, Accent has designed and developed an on-premises system with the same features and functionality as its cloud counterpart, VoiceONE Cloud.

Key to the new on-premises solution is the simple, subscription-based payment model. With VoiceONE Onsite, the customer does not buy, rent or lease the installed IP-PBX equipment, but simply pays a predictable per-user monthly fee – the same monthly fee as the cloud-based alternative. The fee does not fluctuate from month to month, and Accent provides the on-site UC appliance and any gateways required to interface with the customer’s existing PSTN service (typically PRI, POTS lines, or SIP interfaces). The consistent subscription-based pricing is appealing for budgetary reasons, but also makes it easier for a business to move to an all-cloud solution in the future, if desired.

Cisco

In November 2016, Cisco introduced the new Cisco Spark Flex Plan, a single subscription plan that offers the same pricing for both cloud and on-site Cisco deployments. With the plan, customers that opt to install a telephony system on-site will have no up-front software licensing expenses, and instead will spread this out as a pay-as-you-go monthly subscription fee (customers will still need to purchase the server equipment that will run the software). The consistent cloud and premises pricing also makes it easier to move to an all-cloud solution in the future, if and when this makes sense for their particular business operation.

The new Cisco Spark Flex Plan essentially extends the Spark pricing packages to include premises-based equipment (the initial Spark packages included cloud-only solutions). Now, the Cisco Spark Message and Advanced Meetings package lets customers select either WebEx cloud services or Cisco’s on-site Meeting Server. The Spark Call packages include options for cloud-based or on-premises call control, either Spark Call or Cisco’s Hosted Collaboration Solution cloud-based solutions or Cisco’s on-premises Unified Communications Manager, Business Edition, Unity Connection, Emergency Responder or Expressway products.

NEC

In February 2017, NEC introduced UNIVERGE SV9100 BLUE, a complete out-of-the-box, on-premises business phone solution that evolved from the company’s SV9100 Communications Server for small and mid-sized businesses (SMBs), but which offers monthly subscription-based billing (an operating expense payment model). Customers will avoid the upfront equipment costs and pay only for capacity needed (determined by the number of subscribers) through a single monthly bill that covers all system hardware, phones and SIP trunk services. The UNIVERGE BLUE Cloud Portal assigns system licensing and trunking for up to 32 desktop phone users, 28 mobile device users and 16 SIP trunks. Customers also select a 3- or 5-year contract which becomes a month-to-month agreement at the end of the contract term.

UNIVERGE SV9100 BLUE enables a subset of the full SV9100 capabilities, including 50 or so essential telephony features along with NEC’s Multi-Line Client (MLC) for iOS and Android devices and NEC’s UC Suite for PC-based or web browser-based call management. The next release due out later this year will enable SV9100 “Premium” license capabilities for all users which adds support for a UC Attendant, CRM integration and ACD. Hybrid networking is also forthcoming and will allow multi-site businesses to configure a unified network across all locations regardless of the deployment type (the cloud-based SV9100 BLUE or the on-premises SV9100 Communications Server).  Note: NEC’s UNIVERGE SV9100 was launched in 2014 to replace the earlier SV8100 SMB platform with a simpler, all-in-one solution and embedded applications for unified messaging, mobility and unified communications.

NetFortris (Fonality)

The former Fonality (acquired by NetFortris in February 2017) was one of the first to introduce a single pay-as-you-go pricing model that applies to both cloud and on-premises phone solution deployments. Back in 2013, Fonality recognized the appeal of subscription-based pricing to any business, regardless of the deployment model (cloud or premises). For customers that opt for an on-site deployment, the NetFortris/Fonality subscription includes a high-capacity server with the company’s hybrid-hosted technology for administration. The system’s control panel and configuration settings are stored with NetFortris/Fonality (a managed server) and accessed via a web browser; configuration settings are proactively backed up off-site. Customers that opt to have the entire solution hosted in the cloud also receive these proactive services, plus the benefit of having NetFortris/Fonality manage the hardware and network connections in a data center.

The company offers three tiered Editions: Essentials, Professional and Ultimate, with the Professional and Ultimate Editions deployed in the cloud or with a NetFortris/Fonality-provided appliance server on-site (the more basic Essentials Edition is a cloud-only deployment).  Pricing varies by the add-ons selected, and there is a built-in discount based on the number of users. (Note that customers still have the option of a one-time payment model for on-site equipment and/or software if desired.)

Sandra Gustavsen