Research Radar: 2018

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If this past year is any indication, we are in for another whirlwind year of surprises and major changes in the fast-evolving business communications space.

It’s that time again. Another year has gone by, and we look back to see what trends are emerging in the world of business communications. How did our “watch list” from last year pan out? What new technology areas or industry events have risen to the top?

Team collaboration remains a key trend and fast-emerging category of applications. Sometimes referred to as “workstream communications and collaboration” or “workstream messaging,” these teamwork tools make multiple technologies such as messaging, audio, video, multi-party meetings and content sharing accessible from a single user interface on a desktop or a mobile device. Team members simply log into a virtual “room” or space where they can easily share information together in real-time with others on the team.

A large number of team collaboration apps are now available, including many on the market for years from cloud providers (e.g. Slack, Redbooth, Atlassian HipChat, RingCentral Glip and others). In 2016, we highlighted team collaboration solutions from some of the established telecom manufacturers: Unify Circuit, Cisco Spark, Interactive Intelligence PureCloud Collaborate (Interactive Intelligence is now part of Genesys, and PureCloud Collaborate is blended into Genesys’ PureCloud Communicate offering), Fonality’s Intellinote integration (Fonality is now part of NetFortris, and Intellinote is now BroadSoft’s Team-One), Mitel MiTeam and Avaya’s Zang Spaces.

Throughout 2017, more team-focused apps entered the market. Just briefly: 8×8 acquired LeChat, Inc. and its Sameroom interoperability platform, and subsequently partnered with Atlassian to integrate 8×8 Virtual Office UCaaS with Atlassian HipChat team collaboration and 8×8 ContactNow with JIRA Service Desk. Amazon Web Services introduced the Amazon Chime cloud-based service for team meetings. CafeX unveiled the Chime Spaces virtual workspace, formerly Vayyoo Rooms acquired in January 2017. Google announced two new services for teams, Hangouts Meet and Hangouts Chat. Microsoft rolled out the Microsoft Teams chat-based workspace to Office 365 business users, and subsequently announced Teams will evolve to replace the Skype for Business Client in Office 365. ShoreTel entered the team collaboration space with ShoreTel Teamwork. Slack introduced an enterprise-grade offering, the Slack Enterprise Grid. Verizon added BroadSoft’s Team-One for its Verizon One Talk customers.

Based on this run-down and all the vendor consolidation, you can see how fast the industry is changing (more on that below).

Watching in 2018

As we continue to watch the evolution and adoption of team collaboration apps, we’ll also have three additional areas on our research radar for 2018: subscription-based pricing for on-premises telephony equipment, new business communications solutions around artificial intelligence (AI), and the surety of more vendor consolidation.

  1. Simplifying the On-prem Payment Model

We have all witnessed the growing appeal for 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.

While paying a monthly fee is the norm for a hosted/cloud service, 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 unified communications (UC) solutions.  With these businesses in mind, traditional telephony equipment vendors have been 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 beginning to introduce new payment models that apply to both cloud and premises deployments.

Several telephony equipment vendors on our radar, including Accent, Cisco, NEC and Netfortris (Fonality), 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 will see more of the established telecom vendors offer this pay-as-you-go model in 2018.

Business telephones joined the list of “as-a-service” equipment options when Polycom launched a new Device-as-a-Service (DaaS) program in August that makes its desktop business phones and conferencing devices available as a monthly subscription.  Instead of buying and stocking the equipment upfront, Polycom partners simply pay a monthly fee for the phones or devices, thereby avoiding the usual financial risks of purchasing and owning equipment. The partner can then pass on this flexibility to their own customers. Panasonic UK launched a similar “Hardware-as-a-Service” (HWaaS) program in the European market. Program details will vary, but the trend in offering business phones as-a-service will continue as more SIP endpoint providers see the benefit to offering a simpler, subscription-based payment model for their hardware devices.

  1. AI in the Enterprise

Nearly all of the business communications vendors we track are highlighting new solutions related to Artificial Intelligence (AI), or at least referring to “AI” in their marketing strategies. Research firm Gartner shows how quickly the term “artificial intelligence” has advanced on the company’s “Hype Cycle” (see a helpful definition of the technology here). “AI” did not even appear in the top 100 search terms on the company’s website in January 2016, but by May 2017, the term had moved into the top 10. Gartner aptly point outs, however, that while most businesses are forging ahead with building and marketing an AI-based product, many are doing so without thoroughly identifying actual needs and real business value. Nevertheless, Gartner predicts that by 2020, AI will be among the top five investment priorities for 30% of CIOs.

We can be sure that all business communications vendors will be addressing AI and related technologies in 2018 to help their customers take advantage of the digital transformation and new opportunities that could improve the customer experience – as well as to handle the larger and larger amounts of data (the result of Internet-connected devices or IoT) that are impossible for humans to manage.

Below is a sampling of AI-related solutions and initiatives that are already in the works from the business communications vendors we track.

  • Avaya unveiled the A.I.Connect initiative and partner ecosystem that will focus on building and integrating artificial intelligence (AI) capabilities into Avaya Oceana (Avaya’s contact center portfolio) and Avaya Breeze (the Avaya Aura application development environment).
  • BroadSoft added AI capabilities to its UC-One Connect mobile application for retrieving and displaying relevant information from files, emails and social media to the mobile device user based on who the user is talking to or messaging.
  • Cisco introduced the Cisco Spark Assistant voice assistant for help with starting, joining and leaving meetings (based on MindMeld’s machine-learning technology acquired by Cisco in May 2017). Spark Assistant will roll-out in phases, adding more and more cognitive capabilities like leveraging and learning from a user’s calendar, company directory and Cisco Spark activity.
  • Genesys released the next evolution of its omni-channel Customer Experience Platform, dubbed G-NINE. Among the new capabilities is an AI solution for customer service called “Kate” developed around the company’s concept of “blended AI” which combines live agent interactions with AI, bots and machine learning.
  • Microsoft announced new developer tools for Microsoft Teams to help build chat bots, apps and custom integrations that will differentiate Microsoft Teams from the myriad of other messaging platforms. Microsoft also continues to roll out AI capabilities for its Bing web search tool, Cortana digital assistant and Office 365 services.
  • Mitel is partnering to develop solutions that combine Mitel UC platforms within an Internet of Things (IoT) environment. Currently, Mitel’s Mass Notification system is being utilized at Charles de Gaulle airport in Paris to send voice and SMS alerts to the airport’s emergency medical response team when unauthorized access to automated external defibrillator (AED) cabinets is detected via sensors.
  • NEC Corporation of America is working with GE Digital and Microsoft to create new solutions around AI, IoT and digital transformation. Initial solutions include AI for Visual Inspection (uses NEC’s image analytics to find and identify defects during a manufacturing process) and AI for Parts Traceability (uses NEC’s Fingerprint of Things AI pattern recognition).
  • RingCentral is developing artificial intelligence (AI) and chatbot integrations for its Glip team collaboration application, including a new Salesforce Alert Bot that captures Salesforce events and sends notifications to Glip teams.
  1. Vendor Consolidation

The business communications industry is evolving fast in terms of technology, but also in the number of vendors and providers competing in this market.

Mitel is a case in point. Just a few weeks after finalizing its purchase of the Toshiba Telecom assets last July, Mitel announced an agreement to acquire ShoreTel. Per Frost & Sullivan’s analysis of the unified communications as a service (UCaaS) space, the acquisitions make Mitel  “the second largest UCaaS provider in the North American market in terms of revenue (behind RingCentral) and a strong third in terms of users (behind RingCentral and 8×8).” Globally, Mitel remains a “formidable” player, though its competitive position in the worldwide market is not as altered by the mergers, according to Frost & Sullivan’s insights.

And, major shake-ups in the UC industry keep on coming. The news that Cisco will acquire cloud unified communications wholesaler BroadSoft combines two major market leaders in the unified communications as a service (UCaaS) space. BroadSoft will add some 19+ million business (voice and contact center) subscribers to the Cisco base. BroadSoft has a 49% market share in UCaaS new line shipments and a 45% market share in cloud installed base, according to the Synergy Research Cloud & On-Premise IP PBX Market Share Report June 2017. The acquisition is expected to close in first quarter 2018. There will be much more to report on this major consolidation as we size up and sort out what this means to the portfolios, partners and customers going forward.

Other significant 2017 consolidations included: NetFortrisFonality, WestVocus Group, 3CXAskozia, SonusGenband, VMwareVeloCloud, and WindstreamBroadview Networks, among others. Just days into 2018, new mergers in the business communications space are already underway: Polycom is set to acquire VoIP software and hardware developer Obihai, and Star2Star to merge with European UCaaS provider Blueface.

Speculation about the fate of Avaya and its voluntarily filing for Chapter 11 bankruptcy protection on January 19, 2017 was much discussed during 2017. From the beginning, Avaya stressed that this was a decision to restructure the company’s finances and did not reflect upon the strength of their operations or business model. Indeed, Avaya introduced a good number of new UC-related solutions and new partnerships throughout these proceedings. Just weeks ago, on December 15, 2017, Avaya announced the successful completion of its debt restructuring and its emergence from Chapter 11 – the beginning of a new chapter for Avaya. The company is now taking steps to list on the New York Stock Exchange and promises to let us in on exciting announcements about its products and services in January 2018.

If this past year is any indication, we are in for another whirlwind year of surprises and major changes in the fast-evolving business communications industry. Stay tuned.

Sandra Gustavsen