According to the Gartner 2020 Magic Quadrant for Unified Communications as a Service, Worldwide report, the unified communications (UC) market is making a fundamental shift from premises-based UC to cloud UCaaS. “By 2024, 74% of the new UC licenses purchased by organizations will be cloud-based, up from 48% in 2019.” Largely due to the fact that future cloud UC offerings will be far ahead in terms of features, functions, portals, analytics, and dashboards.”
Cloud is clearly winning the market and running a sound total cost of ownership (TCO) analysis is critical to achieving funding approval for the cloud migration you are considering. TCO is the metric that helps you understand the return on investment so that you can prioritize and focus. By capturing the key cost considerations, you gain a workable model that you can use to make informed decisions. Ensuring a true comparison of costs for on-premises vs. cloud can be challenging. Organizations should take a holistic approach to include elements such as talent, capability, time to market, and cost flexibility.
Here is our approach to looking at cloud TCO as it relates to business communications systems.
Breaking down the top hidden costs for business communications:
A careful cost roll-up analysis typically uncovers the following:
- Premises-based systems require upgrades, maintenance, and trained resources. Expenses from network upgrades, licen?e fees, installation, and separate building wiring can quickly add up to a surprisingly large number.
- Telecom costs can be large enough to strain the IT budget. You will need carrier connectivity to connect the phones in your building to your chosen telecom provider. Line items for local, long-distance, and non-geographic calling may also be required. Other hidden costs may include the need to overprovision some phone lines and then potentially and unknowingly continuing to pay for them.
- Stand-alone services accumulate significant charges. Legacy on-premises phone systems stop well short of offering a unified communications solution that encompasses video calling, web meetings, team messaging, and more. Costs for these additional services need to come through third-party vendors and can add up to substantial sums. You may discover expenses for services, such as audio and video conferencing, team messaging, and internet faxing, that individual business units, managers, or employees have signed up for overtime.
- Connecting locations adds cost and complexity. Even if you don’t have multiple locations, you may have a distributed workforce that you need to serve. The demands of bandwidth-intensive communications between two buildings or multiple sites cause IT headaches and budget issues.
- Predictability of current and future costs and feature availability can be challenging.
How does cloud compare?
A cloud communications and collaboration solution like Unify Office by RingCentral not only gives you everything you need to simplify and empower your business, but it also completely alters the cost structure of both hard and soft costs. Here are some of the hard cost savings:
- One all-inclusive cloud communications and collaboration solution: Get all you need in a phone system plus audio and video conferencing, meetings, and team messaging and collaboration. This eliminates the need for additional services from third-party vendors, immediately removing a layer of surplus expenses and complexity. It also centralizes management and eliminates shadow IT tools and applications to help mitigate cybersecurity risks at both headquarters and remote locations.
- Lower multi-site management costs: Anyone can add phones and numbers, make changes, and handle moves from an intuitive web interface.
- Reduced IT maintenance and infrastructure: It’s all handled in the cloud by the service provider, eliminating operational expenses and IT distraction.
- Elimination of many telephony costs: This includes the removal of several line items such as switches since all voice and unified communications traffic travels over the internet.
- Lower IT service provider costs for ongoing updates: Unify Office by RingCentral handles updates and provides continuous improvements and innovations. Cloud technology removes the need to schedule upgrades and hire experts to manually upgrade your legacy phone system.
- Increased worker productivity: New capabilities such as direct extension dialing and the ability to forward calls and faxes to mobile phones make workers more effective. Unify Office by RingCentral also integrates out of the box with leading CRM systems like Salesforce and Microsoft productivity suites, as well as over 100 other tools.
- Reduced up-front cost: Phone devices can often be reused, making it a lot easier to upgrade to the latest service without a large initial layout. Alternatively, softphones can be used, removing the cost of phone hardware altogether.
- Decreased cost of supporting a mobile workforce: The unique Unify Office app enables you to turn a smartphone into an office phone and saves carrier costs, especially for conference calls, video meetings, and those associated with international travel.
- Increased reliability and business continuity: Cloud applications are supported by multiple geographically redundant data centers, with flexible, highly reliable connectivity options that are available from anywhere, anytime. With as high as 999% reliability rating, the cloud has supplanted on-premises as today’s most reliable option. If a natural emergency strikes, workers can still make and receive calls and continue doing their work remotely as long as they can access a mobile phone or the internet.
- Gather critical business insights with powerful analytics: Unify Office by RingCentral offers a robust set of real-time telephony analytics on a global scale. Granular and customizable reports provide actionable insights to enable improvements in areas such as sales campaign effectiveness, customer experience management, and staffing requirements, with the added capability of monitoring call quality and distributed workgroups.
Key considerations of calculating cloud cost efficiencies:
CFOs and IT leaders have moved away from non-financial success metrics such as “does it work?” and “are people using the app?” to measure the value that collaboration technology investments deliver. Primary metrics include:
- Upfront cost savings from eliminating costs associated with premises platforms, reducing staffing costs, and taking advantage of cloud services that enable organizations to only pay for the services they need. Read how customers save on average 42% when migrating off on-premise PBX systems to RingCentral cloud products.
- Revenue gains from transforming the business to improve responsiveness as well as by leveraging emerging technologies to provide new services). For example, companies using video for customer and sales engagement often see higher sales close rates, increased upsell opportunities, and improved customer retention. [source]
- Productivity improvements from reducing the time it takes to carry out repeatable processes ranging from customer onboarding to employee training to software updates to product development
- Optimizing architecture by determining optimal vendor strategy. Adopting a single-vendor approach results in a 56% lower TCO versus multi-vendor strategy. Savings come from reducing operational and licensing costs, and simplifying the end-user experience.
- Integrating Contact Centre: Integrating UCaaS with Contact Center-as-a-Service (CCaaS) provides additional measurable benefits including an increase in customer satisfaction ratings of 56.7%, a 19.7% reduction in operational costs, and a 23.4% reduction in monthly per-agent spending on licenses. Today, more than 71% of companies have integrated their UC and Contact Center platforms. [source]
The cost-saving benefits along with the simplicity, flexibility, and manageability of unified cloud communications explain the rapid adoption of these solutions by businesses of all sizes. Unify Office by RingCentral provides all-inclusive cloud communications and collaboration solution that can be customized to suit your business needs and budget. Not only can you rest assured that your overhead will be reduced considerably, but you’ll have the peace of mind that your employees have everything they need to do business effectively today and long into the future.
Book a total cost of ownership assessment with your Atos account manager today.