IT and Business Insights for SMB Solution Providers

Unified Communications: On-Premises or in the Cloud?

To know whether to pitch on-premises or hosted UC, know your clients’ business goals and taste for cloud, as well as the pros and cons of each. By Carolyn Heinze

While many SMBs are moving to the cloud, not all organizations need, or want, an off-premises unified communications (UC) solution. Which option is best suited for a particular client? It depends on how the company does business.

The biggest argument in favor of cloud-based UC is cost: There’s no up-front capital investment, subscriptions can be accounted for as operating expenses, and SMBs can benefit from economies of scale they wouldn’t realize if they had to purchase the equipment and software necessary to run UC in-house.

But, argues Bruce Beals, a subscription-based model still means SMBs have to make ongoing payments, and some prefer to pay for a solution once and be done with it. Beals is solutions manager for UC at CDW, an IT provider in Vernon Hills, Ill., that offers both on-premises and cloud-based UC. He likens adopting a subscription model to leasing a car; you have to weigh the pros and cons. For some drivers, a lease makes sense based on finances and use case; for others, it’s better to own the vehicle outright.  

SMBs should know that if they decide to go with on-premises UC, however, they won’t have access to the latest features available on the market unless they have the internal resources to continually update the system. And, even if an organization has in-house IT support, Beals suggests that having IT manage on-premises UC may not be the best use of its talents. “We recommend that everyone in an IT capacity [work] toward moving the business forward,” he explains. “When we look at a cloud-based solution, we may use the term ‘save in staffing costs.’” That doesn’t necessarily mean laying off all your IT staff, he says, “but being able to refocus them on things that increase the bottom line, or reduce costs, or increase market share.”

For businesses in highly regulated industries, security is a priority, which may tilt the scales in favor of an on-premises solution. On the other hand, seasonal businesses that expand and contract may opt for cloud-based UC for its rapid deployment and ability to add or subtract seats as needed.

This weighing of the pros and cons requires that channel partners understand their customers’ organizations, clientele, goals, and long-term vision. “One of the first things we look at is: What is their appetite for cloud? Are they using cloud for other solutions like email, or document storage, or faxing? If there are no other cloud solutions deployed, then they probably don’t have an appetite for it,” Beals says. Some companies still have trust issues when it comes to cloud-based solutions, and “voice is a near and dear application to most companies’ hearts––it’s not something they take lightly; it’s their lifeline to their customers. So if they aren’t comfortable with moving their email to the cloud, they’re probably not going to be comfortable moving a collaborative solution into the cloud.”

Good for Clients, Good for You?
Phil Edholm, president and principal of PKE Consulting LLC, a Pleasanton, Calif.-based consultancy that specializes in UC and networking, notes that channel partners deciding which solution to promote must also take into account their own business models. “The big advantage of selling a premise solution is that you get an up-front purchase, up-front revenue, and a longer commitment to service that you can deliver,” he says. “With cloud, depending on whether you’re looking at trying to deliver your own cloud offer, or you’re actually reselling another cloud offer, they are very different economic models.”

That said, it pays for channel partners to be able to offer both on-premises and cloud-based UC, says Bern Elliot, vice president and distinguished analyst at Gartner Inc. “You don’t want to have to only sell one over the other,” he says. “They have some trade-offs, and it depends on which way the enterprise wants to go on the trade-off. What you want to be able to do is go in and satisfy that need.”

About the Author


CAROLYN HEINZE is a regular freelance contributor to ChannelPro-SMB.

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